INDEPENDENT BANK CORP /MI/, S-2, 1996-10-21

INDEPENDENT BANK CORP /MI/
S-2, 1996-10-21
STATE COMMERCIAL BANKS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 21, 1996

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------

FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------

INDEPENDENT BANK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
MICHIGAN 38-2032782
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
</TABLE>

230 WEST MAIN STREET
IONIA, MICHIGAN 48846
(616) 527-9450
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------

WILLIAM R. KOHLS
230 WEST MAIN STREET
IONIA, MICHIGAN 48846
(616) 527-9450
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------------

COPIES TO:

<TABLE>
<S> <C>
MICHAEL G. WOOLDRIDGE JAMES L. NOUSS, JR.
VARNUM, RIDDERING, SCHMIDT & HOWLETT LLP BRYAN CAVE LLP
333 BRIDGE STREET, N.W. 211 N. BROADWAY, SUITE 3600
GRAND RAPIDS, MICHIGAN 49504 ST. LOUIS, MISSOURI 63102-2750
(616) 336-6000 (314) 259-2000
</TABLE>

------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. / /

If the Registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES BEING REGISTERED REGISTERED(2) PER UNIT PRICE REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Depositary Shares(1)............. 690,000 $25.00 $17,250,000 $5,227.27
Common Stock ($1.00 par value)... (3) -- -- --
- -------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------
</TABLE>

(1) Each Depositary Share represents a 1/4 interest in one share of %
Cumulative, Convertible Preferred Stock, Series A ("Preferred Stock").
(2) Includes 90,000 Depositary Shares which may be sold by the Company to cover
over-allotments.
(3) Such indeterminate number of shares as may be issuable upon conversion of
the Preferred Stock, including such additional shares as may be issuable as
a result of the adjustments to the conversion price.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE> 2

INDEPENDENT BANK CORPORATION

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
FORM S-2 NUMBER AND CAPTION LOCATION IN PROSPECTUS
------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of the
Prospectus................................. Outside Front Cover
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front Cover; Available Information;
Outside Back Cover
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............... Prospectus Summary; Consolidated Financial
Data; Risk Factors
4. Use of Proceeds............................ Prospectus Summary; Use of Proceeds
5. Determination of Offering Price............ Not Applicable
6. Dilution................................... Not Applicable
7. Selling Security Holders................... Not Applicable
8. Plan of Distribution....................... Underwriting
9. Description of Securities to be
Registered................................. Prospectus Summary; Description of
Depositary Shares; Description of Capital
Stock
10. Interests of Named Experts and Counsel..... Legal Matters; Experts
11. Information with Respect to the Company.... Prospectus Summary; Recent Developments;
Price Range of Common Stock and Dividends;
Capitalization; Selected Consolidated
Financial Data; Management's Discussion and
Analysis of Financial Condition and Results
of Operations; Business; Incorporation of
Certain Documents by Reference; Description
of Depositary Shares; Description of
Capital Stock; Consolidated Financial
Statements
12. Incorporation of Certain Information by
Reference.................................. Incorporation of Certain Documents by
Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
</TABLE>
<PAGE> 3

SUBJECT TO COMPLETION, DATED OCTOBER 21, 1996
PROSPECTUS
600,000 SHARES

INDEPENDENT BANK LOGO

DEPOSITARY SHARES EACH REPRESENTING A 1/4 INTEREST IN A SHARE OF
% CUMULATIVE, CONVERTIBLE PREFERRED STOCK, SERIES A
(LIQUIDATION PREFERENCE OF $25 PER DEPOSITARY SHARE)

Each of the 600,000 Depositary Shares offered hereby ("Depositary Shares")
represents a one-quarter (1/4) interest in a share of % Cumulative,
Convertible Preferred Stock, Series A ("Preferred Stock") of Independent Bank
Corporation ("Company") deposited with State Street Bank & Trust Company, as the
Depositary and, through the Depositary, entitles the holder to all proportional
rights and preferences of the Preferred Stock (including dividend, conversion,
voting, redemption, and liquidation rights). The liquidation preference of each
Depositary Share is $25. See "Description of Depositary Shares."

Dividends on the Preferred Stock will be cumulative from the date of
issuance and will be payable quarterly on the last business day of each January,
April, July, and October of each year, commencing on , 1997, at
the rate of % per annum (equivalent to $ per annum per Depositary Share).

Each share of Preferred Stock will be convertible at the option of the
holder into shares of Common Stock, par value $1.00 per share ("Common Stock"),
of the Company at a conversion price of $ per share of Common Stock
(equivalent to a conversion rate of share of Common Stock for each
Depositary Share), subject to adjustment in certain events. On ,
1996, the last sale price of the Common Stock as reported on the Nasdaq National
Market was $
per share.

The Preferred Stock will not be redeemable prior to , 2001.
Thereafter, subject to Federal Reserve Board approval, the Preferred Stock will
be redeemable at the option of the Company, in whole or in part, at any time or
from time to time, at a price equal to $25 per Depositary Share, plus in each
case accrued and unpaid dividends to the redemption date.

The Depositary Shares have been approved for quotation on the Nasdaq
National Market under the symbol "IBCPP."
------------------------

SEE "RISK FACTORS" COMMENCING ON PAGE 7 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------
THE SECURITIES OFFERED BY THIS PROSPECTUS ARE NOT SAVINGS OR DEPOSIT ACCOUNTS
OR OTHER OBLIGATIONS OF A BANK AND ARE NOT INSURED BY THE BANK INSURANCE
FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND OF THE FEDERAL
DEPOSIT INSURANCE CORPORATION, OR ANY OTHER GOVERNMENT AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Depositary Share................... $25.00 $ $
- ------------------------------------------------------------------------------------------------------
Total(3)............................... $15,000,000 $ $
- ------------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company has agreed to indemnify the Underwriter against certain
liabilities under the Securities Act of 1933. See "Underwriting."

(2) Before deduction of expenses payable by the Company estimated at $265,000.

(3) The Company has granted the Underwriter an option exercisable within 30 days
from the date of this Prospectus to purchase up to 90,000 additional
Depositary Shares on the same terms and conditions set forth above to cover
over-allotments, if any. If all such additional shares are purchased, the
total Price to Public, Underwriting Discount, and Proceeds to the Company
will be $17,250,000, $ , and $ , respectively. See
"Underwriting."
------------------------

The Depositary Shares are offered by the Underwriter subject to receipt and
acceptance by it, prior sale and the Underwriter's right to reject any order in
whole or in part and to withdraw, cancel or modify the offer without notice. It
is expected that delivery of the Depositary Shares will be made in St. Louis,
Missouri on or about , 1996.

STIFEL, NICOLAUS & COMPANY
INCORPORATED

October , 1996

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
<PAGE> 4

LOGO

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEPOSITARY
SHARES OFFERED HEREBY, THE COMMON STOCK, OR BOTH, AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.

2
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
elsewhere in this Prospectus or incorporated by reference herein. Unless
otherwise indicated, all information in this Prospectus is based on the
assumption that the Underwriter will not exercise its over-allotment option.

THE COMPANY

The Company is a bank holding company with four wholly owned subsidiary
banks (the "Banks") engaged in the business of retail and commercial banking in
portions of Michigan's lower peninsula. Collectively, the Banks serve over 45
communities, which are principally rural and suburban in nature, through their
four main offices and a total of 45 branches and five loan production offices.

Over the past five years, the Company has experienced significant growth in
its assets while at the same time retaining a net interest margin that has
exceeded 5% of average earning assets. During this same time period, the
Company's average return on equity exceeded 15%. Since December 31, 1990, total
assets have increased by 119% to $793.2 million at September 30, 1996. Earnings
per share have grown by a compounded annual rate of 14.6% to $2.38 for the year
ended December 31, 1995, from $1.38 in 1991.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------------------------------
1996 1995 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
Assets....................... $793,152 $574,988 $590,147 $516,211 $482,027 $403,125 $406,469
Net income................... 5,819 4,987 6,810 6,031 5,606 5,109 4,018
Net income per share......... 2.02 1.74 2.38 2.09 1.95 1.78 1.38
Return on equity............. 15.78% 15.60% 15.59% 15.22% 15.21% 15.88% 13.56%
Net interest margin.......... 5.45 5.69 5.65 5.88 5.85 5.88 5.20
</TABLE>

THE COMPANY'S APPROACH TO COMMUNITY BANKING

The Company attributes its past success to the consistent application of
community banking practices in predominantly rural and suburban markets. The
Company's operating philosophy seeks to preserve those elements of traditional
community banking which management believes create a competitive advantage in
the markets in which it operates. Accordingly, the Banks emphasize personal
service and customer recognition, prompt response to customer needs,
convenience, continuity of personnel and management, and commitment to and
participation in the community.

DECENTRALIZED MANAGEMENT. The Company vests management of the Banks with
the authority to make local pricing and credit decisions to better anticipate
customer needs, respond to customer demands, and identify profitable
opportunities within their respective markets. While management of each of the
Banks is granted the authority to make decisions for its local operations, it is
also held accountable for its performance.

CORPORATE ADMINISTRATIVE AND SUPPORT SERVICES. To complement the Company's
decentralized management structure and preserve its community banking practices
within an expanding franchise, the Company's corporate service departments
provide a variety of services to each of the Banks. The Company believes that
this partnership between the Banks' management and Company personnel allows the
management of each of the Banks to focus on sales and customer service while
providing the Company with internal controls, the ability to provide consistent
service quality and attain operating efficiencies.

3
<PAGE> 6

BUSINESS STRATEGY

The ability to profitably deploy the capital generated by the Company's
results of operations or otherwise maintain financial leverage is critical to
the Company's mission to create value for its shareholders. Much of the
Company's recent growth has resulted from acquisitions. The Company will
continue to consider opportunities for expansion through selective acquisitions
in markets where management believes its community banking approach creates a
competitive advantage. As part of this strategy, the Company has agreed to
acquire eight branch facilities from First of America Bank -- Michigan, N.A.,
including approximately $121.5 million in deposits and $21.5 million in loans.
See "Recent Developments."

In the absence of suitable acquisition candidates, the Company will
continue to rely upon the Banks' ability to profitably fund loan growth with
nondeposit funding sources, including advances from the Federal Home Loan Bank,
as well as traditional deposit based funding sources. The cost of such
nondeposit funds is a principal consideration in the Banks' loan and deposit
pricing strategies.

The Company intends to continue to focus on the management of its capital
resources. The Company's dividend policies and share repurchase plan have been
integral components of management's efforts to maintain profitable financial
leverage.

4
<PAGE> 7

THE OFFERING

Securities Offered............ 600,000 Depositary Shares, each representing a
one-quarter (1/4) interest in a share of the
Company's % Cumulative, Convertible
Preferred Stock, Series A.

Liquidation Preference........ $25 per Depositary Share (equivalent to $100
per share of Preferred Stock), plus an amount
equal to accrued and unpaid dividends.

Conversion Rights............. The Preferred Stock is convertible at any time,
at the option of the holder, unless previously
redeemed, into shares of the Company's Common
Stock at a conversion price of $ per
share of Common Stock (equivalent to
share of Common Stock for each Depositary
Share), subject to adjustment, plus cash or
Common Stock in an amount equal to accrued and
unpaid dividends.

Payment of Dividends.......... Cumulative from the date of issuance and
payable quarterly on the last business day of
January, April, July, and October, commencing
, 1997, at the annual rate of %
(equivalent to $ per Depositary Share per
annum).

Optional Redemption........... The Depositary Shares may not be redeemed by
the Company prior to , 2001.
Thereafter, subject to the prior approval of
the Federal Reserve Board, the Depositary
Shares may be redeemed at the option of the
Company, in whole or in part, at any time and
from time to time, at a price equal to $25 per
Depositary Share, plus accumulated dividends to
the redemption date.

Use of Proceeds............... The net proceeds to the Company will be used to
increase its capital to support recent and
pending acquisitions and for other general
corporate purposes. See "Recent Developments."

Voting Rights................. The Depositary Shares do not have voting
rights, except in certain limited
circumstances. See "Description of Capital
Stock -- Preferred Stock."

Nasdaq National Market
Symbol........................ IBCPP

5
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- -------------------------------------------------------------
1996 1995 1995 1994 1993(1) 1992(1) 1991(1)
--------- --------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY RESULTS OF OPERATIONS
Interest income......................... $ 42,598 $ 33,534 $ 45,982 $ 37,820 $ 34,370 $ 36,465 $ 39,175
Interest expense........................ 17,548 12,881 17,900 12,585 12,305 15,150 20,538
------- ------- ------- ------- ------- ------- -------
Net interest income................... 25,050 20,653 28,082 25,235 22,065 21,315 18,637
Provision for loan losses............... 942 477 636 473 657 1,225 1,013
------- ------- ------- ------- ------- ------- -------
Net interest income after provision for
loan losses........................... 24,108 20,176 27,446 24,762 21,408 20,090 17,624
Net gains on sale of securities and real
estate mortgage loans................. 1,121 295 608 75 1,358 324 48
Other noninterest income................ 2,860 2,361 3,158 3,026 2,540 2,418 2,373
Noninterest expense..................... 19,804 15,897 21,702 19,503 17,535 15,703 14,323
------- ------- ------- ------- ------- ------- -------
Income before federal income tax
expense and extraordinary item...... 8,285 6,935 9,510 8,360 7,771 7,129 5,722
Federal income tax expense.............. 2,466 1,948 2,700 2,329 2,165 2,020 1,619
------- ------- ------- ------- ------- ------- -------
Income before extraordinary item...... 5,819 4,987 6,810 6,031 5,606 5,109 4,103
Extraordinary item(2)................... 0 0 0 0 0 0 85
------- ------- ------- ------- ------- ------- -------
Net income........................ $ 5,819 $ 4,987 $ 6,810 $ 6,031 $ 5,606 $ 5,109 $ 4,018
======= ======= ======= ======= ======= ======= =======
PER SHARE DATA(3)
Net income
Primary............................... $ 2.02 $ 1.74 $ 2.38 $ 2.09 $ 1.95 $ 1.78 $ 1.52
Fully diluted......................... 2.02 1.74 2.38 2.09 1.95 1.78 1.38
Cash dividends declared................. 0.74 0.66 0.89 0.72 0.50 0.44 0.39
Book value(4)........................... 17.73 15.81 16.56 14.12 13.57 12.08 10.72
Dividend payment ratio(5)............... 36.52% 37.32% 36.80% 34.62% 25.54% 24.13% 26.53%
Weighted average shares outstanding..... 2,878,174 2,859,794 2,861,898 2,890,368 2,878,386 2,865,902 2,980,657
SELECTED BALANCES(4)
Assets.................................. $793,152 $574,988 $590,147 $516,211 $482,027 $403,125 $406,469
Securities(6)........................... 149,361 116,307 115,459 130,477 136,147 99,798 93,008
Loans and loans held for sale........... 575,807 417,059 434,091 342,658 288,643 261,634 275,144
Allowance for loan losses............... 6,720 5,249 5,243 5,054 5,053 4,023 3,784
Deposits................................ 541,781 408,526 411,624 409,471 423,620 358,874 364,431
Shareholders' equity.................... 50,733 44,906 47,025 40,311 39,049 34,467 30,327
Long-term debt.......................... 7,500 0 0 0 2,750 0 1,287
PERFORMANCE RATIOS(7)
Net interest margin..................... 5.45% 5.69% 5.65% 5.88% 5.85% 5.88% 5.20%
Net income to
Average common equity(8).............. 15.78 15.60 15.59 15.22 15.21 15.88 13.56
Average assets........................ 1.16 1.26 1.25 1.25 1.33 1.26 1.00
Efficiency ratio(9)..................... 66.39 66.24 66.22 66.55 65.27 63.06 65.80
ASSET QUALITY RATIOS(10)
Allowance for loan losses to loans(4)... 1.19% 1.27% 1.25% 1.50% 1.79% 1.58% 1.38%
Nonperforming loans to loans(4)......... 0.61 0.78 0.61 0.84 1.14 1.24 1.74
Allowance for loan losses to
nonperforming loans(4)................ 194.73 164.08 204.80 178.33 157.27 126.75 78.90
Nonperforming assets to total
loans(4).............................. 0.78 0.99 0.79 1.25 2.08 1.99 2.17
Net loan losses to average loans(7)..... 0.11 0.10 0.12 0.16 0.15 0.37 0.30
CAPITAL RATIOS
Average shareholders' equity to average
assets................................ 7.32% 8.04% 8.04% 8.22% 8.72% 7.94% 6.82%
Tier 1 risk-based capital ratio(4)...... 8.18 11.22 11.49 11.90 13.86 14.03 11.90
Total risk-based capital ratio(4)....... 9.44 12.48 12.75 13.03 15.13 15.29 12.56
Leverage ratio(4)....................... 5.23 7.42 7.58 7.40 7.61 8.05 6.88
RATIO OF EARNINGS TO FIXED CHARGES(11)
Including interest on deposits.......... 1.47x 1.54x 1.53x 1.66x 1.63x 1.47x 1.28x
Excluding interest on deposits.......... 2.39 2.88 2.75 6.60 28.95 25.25 10.23
</TABLE>

- -------------------------
(1) Restated to reflect an acquisition accounted for as a pooling of interests.
See Note 2 to the Company's Consolidated Financial Statements.
(2) The cost, net of related taxes, associated with the early retirement of
debt in 1991 is reported as an extraordinary item.
(3) Per share data has been adjusted to give retroactive effect to 5% stock
dividends in 1996 and 1995.
(4) At period end.
(5) For 1991, Common Stock cash dividends as a percentage of net income
adjusted for preferred stock dividends.
(6) Includes securities available for sale.
(7) Ratios for the nine-month periods are annualized.
(8) For 1991, net income to average common equity has been computed by dividing
net income, after deducting dividends on preferred stock then outstanding
by average common equity.
(9) Efficiency ratio equals noninterest expense divided by the sum of tax
equivalent net interest income, net gains on the sale of securities and
loans and other noninterest income.
(10) Loans exclude loans held for sale.
(11) Earnings consist of income before federal income tax plus interest expense.
Fixed charges consist of interest expense. The Company does not currently
have any preferred stock outstanding.

6
<PAGE> 9

RISK FACTORS

Prospective investors should carefully consider, together with the other
information contained and incorporated by reference in this Prospectus, the
following risk factors in evaluating the Company and its business before
purchasing the Depositary Shares offered hereby. In particular, prospective
investors should note that this Prospectus contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 and
that actual results could differ materially from those contemplated by such
statements. The considerations listed below represent certain important factors
the Company believes could cause such results to differ. These considerations
are not intended to represent a complete list of the general or specific risks
that may affect the Company. It should be recognized that other risks may be
significant, presently or in the future, and the risks set forth below may
affect the Company to a greater extent than indicated.

NO ASSURANCE OF SUCCESSFUL INTEGRATION OF BRANCHES

Based on September 30, 1996 financial information, the acquisition of the
eight branches from First of America Bank -- Michigan, National Association
("FOA Branches") by Independent Bank East Michigan ("IBEM"), a subsidiary of the
Company, would increase the assets of IBEM by approximately 107% to $239.4
million. See "Recent Developments." Although the Company has successfully
integrated other acquired banks and branch facilities into its operations in the
recent past without adversely affecting the level of profitability of such
operations, IBEM's ability to integrate the FOA Branches into its current
operations without adversely affecting the level of profitability of IBEM or the
Company as a whole cannot be assured.

IMPACT OF INTEREST RATE CHANGES

The Company's results of operations are derived from the operations of the
Banks and are principally dependent on net interest income, calculated as the
difference between interest earned on loans and investments and the interest
expense paid on deposits and other borrowings. Like other banks and financial
institutions, the Company's interest income and interest expense are affected by
general economic conditions and by the policies of regulatory authorities,
including the monetary policies of the Board of Governors of the Federal Reserve
System ("Federal Reserve Board"). While management has taken measures intended
to manage the risks of operating in a changing interest rate environment, there
can be no assurance that such measures will be effective in avoiding undue
interest rate risk. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Asset/Liability Management."

CREDIT RISKS

As a financial institution, the Company is exposed to the risk that
customers to whom the Banks have made loans will be unable to repay those loans
according to their terms and that collateral securing such loans (if any) may
not be sufficient in value to assure repayment. Credit losses could have a
material adverse effect on the Company's operating results.

REGULATORY RISK

The banking industry is heavily regulated. These regulations are primarily
intended to protect depositors and the Federal Deposit Insurance Corporation
("FDIC"), not shareholders. Regulations affecting the financial institutions
industry are undergoing continuous change, and the ultimate effect of such
changes cannot be predicted. Regulations and laws affecting the Company and the
Banks may be modified at any time, and new legislation affecting financial
institutions may be proposed and enacted. There is no assurance that such
modifications or new laws will not materially and adversely affect the business,
condition or operations of the Company and the Banks. See "Supervision and
Regulation."

7
<PAGE> 10

COMPETITION

The banking business is highly competitive. The Banks compete with other
commercial banks, savings and loan associations, credit unions, mortgage banking
companies, securities brokerage companies, insurance companies, and money market
mutual funds. Many of these competitors have substantially greater resources
than the Company and the Banks and offer certain services that the Company and
the Banks do not currently provide. Such competitors may also have greater
lending limits than the Banks. The number of competitors may increase as a
result of the easing of restrictions on interstate banking effected under the
Riegle-Neal Interstate Banking and Efficiency Act of 1994. In addition, non-bank
competitors are generally not subject to the extensive regulations applicable to
the Company and the Banks. See "Supervision and Regulation."

LIMITATION ON DIVIDENDS

The Company's ability to pay cash dividends on the Preferred Stock and
outstanding Common Stock are dependent upon the earnings of and dividends paid
by the Banks. Bank regulations, state law, and the terms of current or any
future loan agreements may restrict the ability of the Banks to pay dividends to
the Company. See "Supervision and Regulation" and Note 15 to the Company's
Consolidated Financial Statements.

LACK OF MARKET FOR THE DEPOSITARY SHARES

There is no current market for the Depositary Shares. Although the
Depositary Shares have been approved for quotation on the Nasdaq National
Market, there can be no assurance that an active public market will develop or
be maintained for the Depositary Shares. Stifel, Nicolaus & Company,
Incorporated has informed the Company that it presently intends to make a market
in the Depositary Shares, but no assurance can be given as to the liquidity of
the Depositary Shares in the market. See "Market for the Shares" and
"Underwriting."

ADDITIONAL PREFERRED STOCK

The Company's Articles of Incorporation, as amended, authorize the issuance
of 200,000 shares of preferred stock, no par value. The Certificate of
Designation setting forth the terms of the Preferred Stock designates a total of
172,500 of such shares as % Cumulative, Convertible Preferred Stock, Series
A, having a $100 liquidation preference per share. Additional shares of serial
preferred stock may be issued in the future with rights, privileges, and
preferences as may be determined by the Board of Directors of the Company. Such
preferred stock may be on parity with the shares of Preferred Stock with respect
to dividends, conversion, redemption, liquidation and voting rights. In
addition, serial preferred stock junior to the shares of Preferred Stock with
respect to dividends and liquidation may be issued with greater voting rights
than shares of Preferred Stock. The shares of Preferred Stock do not have voting
rights except in certain limited circumstances. See "Description of Capital
Stock -- Preferred Stock."

EXPOSURE TO LOCAL ECONOMIC CONDITIONS

The success of the Company and the Banks is dependent to a certain extent
upon the general economic conditions of the state of Michigan and the geographic
markets served by the Banks. No assurance can be given that favorable economic
conditions will continue to exist in such markets.

SHARES ARE NOT INSURED -- NO MANDATORY REDEMPTION

The Depositary Shares are not insured by the Bank Insurance Fund ("BIF") or
the Savings Association Insurance Fund ("SAIF") of the FDIC or by any other
governmental agency. The Company is not required at any time to redeem the
Depositary Shares.

8
<PAGE> 11

RECENT DEVELOPMENTS

The discussion of recent developments contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Actual results could differ materially from those projected in such
forward-looking statements as a result of, among other things, the factors set
forth in the section entitled "Risk Factors."

Effective September 18, 1996, Independent Bank East Michigan ("IBEM"), a
subsidiary of the Company, agreed to acquire eight branch banking facilities
from First of America Bank -- Michigan, National Association ("FOA Branches").
The FOA Branches are located in the thumb region of eastern Michigan, in the
counties of Huron and Tuscola. Two of the FOA Branches are located in the City
of Bad Axe and one each in the townships or communities of Caseville, Elkton,
Kinde, Ubly, Sebewaing, and Gagetown. As of September 30, 1996, the FOA Branches
had approximately $121.5 million of deposits and $21.5 million of loans. The
acquisition, which is subject to regulatory approval, is expected to be
consummated in December 1996, and will be supported by proceeds from this
offering. See "Use of Proceeds." The real and personal property of the FOA
Branches are being acquired at net book value, and IBEM will pay a loan premium
of 1% on the loans to be acquired and a deposit premium of 6.875% on the
deposits to be assumed. The Company anticipates amortizing the core deposit
premium on a straight line basis over 12 years.

The acquisition of the FOA Branches allows the Company to continue to
expand its branch banking network and further leverage the managerial resources
of the Company and IBEM. The FOA Branches are located in markets similar to
those historically served by the Banks and are contiguous to the communities
that are currently served by IBEM. The acquisition of the FOA Branches will
assist in establishing IBEM as a prominent provider of banking services in the
thumb region of eastern Michigan.

The following pro forma financial information reflects the impact of the
issuance of the Preferred Stock and the purchase of the FOA Branches as if they
were acquired by IBEM as of September 30, 1996. This pro forma information is
presented for informational purposes only as the purchase of the FOA Branches is
not considered the acquisition of a business.

<TABLE>
<CAPTION>
PRO FORMA
COMPANY FOA BRANCHES ADJUSTMENTS COMBINED
-------- ------------ ----------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash & due from banks......................... $ 26,601 $ 98,954 $ (93,454)(1)(2) $ 32,101
Securities.................................... 159,559 0
Loans and loans held for sale (net of
allowance for loan losses).................. 569,087 21,546 215(2) 590,848
Intangible assets............................. 9,737 0 8,355(2) 18,092
Other assets.................................. 28,168 1,581 29,749
-------- -------- -------- --------
TOTAL ASSETS........................... $793,152 $122,081 $ $
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Noninterest bearing......................... $ 68,685 $ 10,470 $ 79,155
Savings and NOW............................. 263,841 53,398 317,239
Time........................................ 209,255 57,613 266,868
-------- -------- --------
TOTAL DEPOSITS......................... 541,781 121,481 663,262
Other borrowings.............................. 190,959 0 $ (13,300)(1) 177,659
Other liabilities............................. 9,679 600 10,279
-------- -------- -------- --------
TOTAL LIABILITIES...................... 742,419 122,081 (13,300) 851,200
Shareholders' equity.......................... 50,733 0 (1)
-------- -------- -------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY.............................. $793,152 $122,081 $ $
======== ======== ======== ========
</TABLE>

- -------------------------
(1) To reflect the anticipated deployment of the cash proceeds from the FOA
Branches and the issuance of the Preferred Stock.

(2) To reflect fair value adjustments relating to assets and liabilities
recorded.

9
<PAGE> 12

USE OF PROCEEDS

The net proceeds to the Company from the sale of 600,000 Depositary Shares
are estimated to be $
($ if the Underwriter's over-allotment option is exercised in full). The
Company will use the proceeds to increase the capital base of IBEM in
contemplation of the pending acquisition of the FOA Branches. See
"Capitalization." In addition, the proceeds from the offering will assist the
Company in maintaining a capital leverage ratio of approximately 5.2% following
the pending acquisition of the FOA Branches and the recent acquisition of North
Bank Corporation, and may be used for other general corporate purposes. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Financial Condition -- Capital Resources." Other than the pending
acquisition of the FOA Branches, the Company has no current or contemplated
agreements or understandings for any acquisitions. The Preferred Stock
represented by the Depositary Shares is expected to qualify as Tier 1 capital
under the Federal Reserve Board's Capital Adequacy Guidelines.

MARKET FOR THE DEPOSITARY SHARES

The Depositary Shares have been approved for quotation on the Nasdaq
National Market under the symbol IBCPP. Stifel, Nicolaus & Company, Incorporated
has informed the Company that it presently intends to make a market in the
Depositary Shares. There can be no assurance, however, that an active and liquid
trading market will develop or, if developed, that such a market will continue.
The offering price and dividend rate have been determined by negotiations among
representatives of the Company and the Underwriter, and the offering price of
the Depositary Shares may not be indicative of the market price following the
offering. See "Underwriting."

10
<PAGE> 13

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Company's Common Stock is traded in the over-the-counter market and
reported on the Nasdaq National Market under the symbol "IBCP." On September 30,
1996, Common Stock was held by approximately 1,900 shareholders of record. The
following table sets forth, for the quarters indicated, the high and low closing
sale prices of the Common Stock and the per share cash dividends paid in such
quarters. The prices shown below are supplied by the Nasdaq and reflect
interdealer prices; the prices may not include retail markups, markdowns or
commissions and have been restated to reflect the Company's 1996 and 1995 five
percent stock dividends. The 1996 stock dividend is payable on October 31, 1996,
to shareholders of record at the close of business on October 4, 1996. There may
have been transactions or quotations at higher or lower prices of which the
Company is not aware.

<TABLE>
<CAPTION>
DIVIDENDS
HIGH LOW PER SHARE
------ ------ ---------
<S> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
First Quarter................................................. $18.00 $16.75 $ .18
Second Quarter................................................ 21.00 17.25 .18
Third Quarter................................................. 21.25 19.25 .18
Fourth Quarter................................................ 22.75 20.50 .18
YEAR ENDED DECEMBER 31, 1995
First quarter................................................. $22.75 $21.50 $ .22
Second quarter................................................ 24.00 21.75 .22
Third quarter................................................. 27.25 23.00 .22
Fourth quarter................................................ 27.25 25.25 .23
YEAR ENDING DECEMBER 31, 1996
First quarter................................................. $27.00 $24.75 $ .25
Second quarter................................................ 27.75 26.00 .25
Third quarter................................................. 29.00 27.00 .25
Fourth quarter (through October , 1996).....................
</TABLE>

The Board of Directors of the Company intends to continue its present
policy of paying quarterly cash dividends on the Common Stock when justified by
the financial condition of the Company and the Banks. The declaration and amount
of future dividends will depend on circumstances existing at the time, including
the Company's earnings, financial condition and capital requirements, as well as
regulatory limitations, including limitations on the ability of the Banks to pay
dividends to the Company, and such other factors as the Board of Directors may
deem relevant. For a discussion of the regulatory approvals necessary for the
Banks to pay dividends, see "Supervision and Regulation" and Note 15 to the
Company's Consolidated Financial Statements.

11
<PAGE> 14

CAPITALIZATION

The following table sets forth (i) the consolidated capitalization of the
Company at September 30, 1996, and (ii) the consolidated capitalization of the
Company on an as adjusted basis giving effect to the issuance of the Depositary
Shares offered by the Company hereby and receipt by the Company of the net
proceeds therefrom, as if the sale of the Depositary Shares had been consummated
on September 30, 1996, and assuming the Underwriter's over-allotment option was
not exercised.

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
<S> <C> <C>
LONG-TERM DEBT
Total long-term debt.................................................... $ 7,500 $ 7,500
SHAREHOLDERS' EQUITY
Preferred Stock, no par value; 200,000 shares authorized, none issued
and outstanding
% Cumulative, Convertible Preferred Stock, Series A, liquidation
preference $100 per share:
150,000 shares issued and outstanding, as adjusted....................
Common Stock, par value $1.00 per share; 14,000,000 shares authorized,
2,861,399 shares issued and outstanding............................... 2,861
Capital surplus......................................................... 24,256
Retained earnings....................................................... 23,447
Net unrealized gain on securities available for sale, net of related tax
effect................................................................ 169
------- -------
Total shareholders' equity......................................... 50,733
------- -------
Total capitalization............................................... $58,233 $
======= =======
</TABLE>

The following table sets forth the consolidated capital ratios of the
Company (i) at September 30, 1996, (ii) as adjusted giving effect to the
issuance of the Depositary Shares offered by the Company hereby and receipt by
the Company of the net proceeds therefrom (assuming the Underwriter's
over-allotment option was not exercised), and (iii) pro forma as adjusted giving
effect to (ii) and to the acquisition of the FOA Branches, as if both
transactions had been consummated on September 30, 1996. See "Recent
Developments."

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
---------------------------------------
PRO FORMA
ACTUAL AS ADJUSTED AS ADJUSTED
------ ----------- --------------
<S> <C> <C> <C>
CAPITAL RATIOS
Shareholders' equity to total assets......................... 6.40% % %
Leverage ratio(1)(2)......................................... 5.43
Risk-based capital ratios(2)
Tier 1 capital to risk-weighted assets..................... 8.18
Total risk-based capital to risk-weighted assets........... 9.44
</TABLE>

- -------------------------
(1) The leverage ratio is Tier 1 capital divided by the difference between
quarterly average total assets less intangibles. See "Supervision and
Regulation -- The Banks."

(2) The capital ratios, as adjusted, are computed including the total estimated
net proceeds from the sale of the Depositary Shares, in a manner consistent
with Federal Reserve Board guidelines.

12
<PAGE> 15

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below, insofar as it
relates to the five years ended December 31, 1995, are derived from the audited
consolidated financial statements of the Company. The data for the nine-month
periods ended September 30, 1995 and 1996, have been derived from unaudited
interim financial statements; however, in the opinion of the Company, such
unaudited interim statements include all adjustments (consisting of normal
recurring accruals) necessary to fairly present the data for such periods. The
results of operations for the nine-month period ended September 30, 1996, are
not necessarily indicative of results to be achieved for the full year. Such
data are qualified by reference to the consolidated financial statements
included elsewhere in this Prospectus or incorporated by reference and should be
read in conjunction with such financial statements and related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------------- -----------------------------------
1996 1995 1995 1994 1993(1)
--------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
SUMMARY RESULTS OF OPERATIONS
Interest income..................................................... $ 42,598 $ 33,534 $ 45,982 $ 37,820 $ 34,370
Interest expense.................................................... 17,548 12,881 17,900 12,585 12,305
-------- -------- -------- -------- --------
Net interest income............................................... 25,050 20,653 28,082 25,235 22,065
Provision for loan losses........................................... 942 477 636 473 657
-------- -------- -------- -------- --------
Net interest income after provision for loan losses............... 24,108 20,176 27,446 24,762 21,408
Net gains on sale of securities and real estate mortgage loans...... 1,121 295 608 75 1,358
Other noninterest income............................................ 2,860 2,361 3,158 3,026 2,540
Noninterest expense................................................. 19,804 15,897 21,702 19,503 17,535
-------- -------- -------- -------- --------
Income before federal income tax expense and extraordinary item... 8,285 6,935 9,510 8,360 7,771
Federal income tax expense.......................................... 2,466 1,948 2,700 2,329 2,165
-------- -------- -------- -------- --------
Income before extraordinary item.................................. 5,819 4,987 6,810 6,031 5,606
Extraordinary item(2)............................................... 0 0 0 0 0
-------- -------- -------- -------- --------
Net income...................................................... $ 5,819 $ 4,987 $ 6,810 $ 6,031 $ 5,606
======== ======== ======== ======== ========
PER SHARE DATA(3)
Net income
Primary........................................................... $ 2.02 $ 1.74 $ 2.38 $ 2.09 $ 1.95
Fully diluted..................................................... 2.02 1.74 2.38 2.09 1.95
Cash dividends declared............................................. 0.74 0.66 0.89 0.72 0.50
Book value(4)....................................................... 17.73 15.81 16.56 14.12 13.57
Dividend payment ratio(5)........................................... 36.52% 37.32% 36.80% 34.62% 25.54%
Weighted average shares outstanding................................. 2,878,174 2,859,794 2,861,898 2,890,368 2,878,386
SELECTED BALANCES(4)
Assets.............................................................. $793,152 $574,988 $590,147 $516,211 $482,027
Securities(6)....................................................... 149,361 116,307 115,459 130,477 136,147
Loans and loans held for sale....................................... 575,807 417,059 434,091 342,658 288,643
Allowance for loan losses........................................... 6,720 5,249 5,243 5,054 5,053
Deposits............................................................ 541,781 408,526 411,624 409,471 423,620
Shareholders' equity................................................ 50,733 44,906 47,025 40,311 39,049
Long-term debt...................................................... 7,500 0 0 0 2,750
PERFORMANCE RATIOS(7)
Net interest margin................................................. 5.45% 5.69% 5.65% 5.88% 5.85%
Return on average equity(8)......................................... 15.78 15.60 15.59 15.22 15.21
Return on average assets............................................ 1.16 1.26 1.25 1.25 1.33
Efficiency ratio(9)................................................. 66.39 66.24 66.22 66.55 65.27
ASSET QUALITY RATIOS(10)
Allowance for loan losses to loans(4)............................... 1.19% 1.27% 1.25% 1.50% 1.79%
Nonperforming loans to loans(4)..................................... 0.61 0.78 0.61 0.84 1.14
Allowance for loan losses to nonperforming loans(4)................. 194.73 164.08 204.80 178.33 157.27
Nonperforming assets to total loans(4).............................. 0.78 0.99 0.79 1.25 2.08
Net loan losses to average loans(7)................................. 0.11 0.10 0.12 0.16 0.15
CAPITAL RATIOS
Average equity to average assets.................................... 7.32% 8.04% 8.04% 8.22% 8.72%
Tier 1 risk-based capital ratio(4).................................. 8.18 11.22 11.49 11.90 13.86
Total risk-based capital ratio(4)................................... 9.44 12.48 12.75 13.03 15.13
Leverage ratio(4)................................................... 5.23 7.42 7.58 7.40 7.61
RATIO OF EARNINGS TO FIXED CHARGES(11)
Including interest on deposits...................................... 1.47x 1.54x 1.53x 1.66x 1.63x
Excluding interest on deposits...................................... 2.39 2.88 2.75 6.60 28.95

1992(1) 1991(1)
--------- ---------
(Dollars in Thousands, Except per Share Amounts)
<S> <C> <C>
SUMMARY RESULTS OF OPERATIONS
Interest income..................................................... $ 36,465 $ 39,175
Interest expense.................................................... 15,150 20,538
-------- --------
Net interest income............................................... 21,315 18,637
Provision for loan losses........................................... 1,225 1,013
-------- --------
Net interest income after provision for loan losses............... 20,090 17,624
Net gains on sale of securities and real estate mortgage loans...... 324 48
Other noninterest income............................................ 2,418 2,373
Noninterest expense................................................. 15,703 14,323
-------- --------
Income before federal income tax expense and extraordinary item... 7,129 5,722
Federal income tax expense.......................................... 2,020 1,619
-------- --------
Income before extraordinary item.................................. 5,109 4,103
Extraordinary item(2)............................................... 0 85
-------- --------
Net income...................................................... $ 5,109 $ 4,018
======== ========
PER SHARE DATA(3)
Net income
Primary........................................................... $ 1.78 $ 1.52
Fully diluted..................................................... 1.78 1.38
Cash dividends declared............................................. 0.44 0.39
Book value(4)....................................................... 12.08 10.72
Dividend payment ratio(5)........................................... 24.13% 26.53%
Weighted average shares outstanding................................. 2,865,902 2,980,657
SELECTED BALANCES(4)
Assets.............................................................. $403,125 $406,469
Securities(6)....................................................... 99,798 93,008
Loans and loans held for sale....................................... 261,634 275,144
Allowance for loan losses........................................... 4,023 3,784
Deposits............................................................ 358,874 364,431
Shareholders' equity................................................ 34,467 30,327
Long-term debt...................................................... 0 1,287
PERFORMANCE RATIOS(7)
Net interest margin................................................. 5.88% 5.20%
Return on average equity(8)......................................... 15.88 13.56
Return on average assets............................................ 1.26 1.00
Efficiency ratio(9)................................................. 63.06 65.80
ASSET QUALITY RATIOS(10)
Allowance for loan losses to loans(4)............................... 1.58% 1.38%
Nonperforming loans to loans(4)..................................... 1.24 1.74
Allowance for loan losses to nonperforming loans(4)................. 126.75 78.90
Nonperforming assets to total loans(4).............................. 1.99 2.17
Net loan losses to average loans(7)................................. 0.37 0.30
CAPITAL RATIOS
Average equity to average assets.................................... 7.94% 6.82%
Tier 1 risk-based capital ratio(4).................................. 14.03 11.90
Total risk-based capital ratio(4)................................... 15.29 12.56
Leverage ratio(4)................................................... 8.05 6.88
RATIO OF EARNINGS TO FIXED CHARGES(11)
Including interest on deposits...................................... 1.47x 1.28x
Excluding interest on deposits...................................... 25.25 10.23
</TABLE>

13
<PAGE> 16

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Management's discussion and analysis of financial condition and results of
operations contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Actual results could differ materially from
those projected in such forward-looking statements as a result of, among other
things, the factors set forth in the section entitled "Risk Factors."

The following presents management's discussion and analysis of the
Company's consolidated financial condition and results of operations as of the
dates and for the periods indicated. This discussion should be read in
conjunction with the Company's Consolidated Financial Statements and the
accompanying notes, and other financial data appearing elsewhere in this
Prospectus.

OVERVIEW

Over the past five years, the Company has experienced a significant growth
in its assets while at the same time retaining a net interest margin that has
exceeded 5% of average earning assets. Since December 31, 1990, total assets
have increased by 119% to $793.2 million at September 30, 1996. During this same
time period, the Company's average return on equity exceeded 15%. Earnings per
share have grown by a compounded annual rate of 14.6% to $2.38 for the year
ended December 31, 1995, from $1.38 for the year ended December 31, 1991.
Earnings per share for the nine months ended September 30, 1996, totaled $2.02,
an increase of 16.1% from earnings of $1.74 per share for the first nine months
of 1995.

Acquisitions of other banks and bank branches accounted for approximately
59% of the $430.7 million increase in total assets from December 31, 1990, to
September 30, 1996. Effective May 31, 1996, the Company acquired North Bank
Corporation ("NBC") in exchange for cash consideration totaling $15.8 million.
On the effective date of that transaction ("NBC Acquisition"), NBC's assets and
shareholders' equity totaled $152.0 million and $9.5 million, respectively, and
the Company recorded goodwill totaling $7.5 million.

On March 7, 1994, the Company acquired KSB Financial, Inc. ("KSB") in
exchange for the Company's Common Stock having an aggregate value of $4.4
million. The transaction ("KSB Acquisition") was accounted for as a pooling of
interests and, at the effective date of the transaction, KSB's assets and
shareholder equity totaled $37.2 million and $2.8 million, respectively. During
1993, the Company acquired American Home Bank and Pioneer Bank ("1993
Acquisitions") in exchange for cash consideration totaling $7.1 million. On the
effective date of these transactions, aggregate assets and shareholders' equity
totaled $66.7 million and $6.6 million, respectively, and the Company recorded
goodwill totaling approximately $500,000.

The Banks' ability to originate and fund rate-sensitive loans with other
borrowings has also provided an opportunity to profitably deploy the capital
generated by the retention of earnings ("Alternate Loan Funding Strategy").
Other borrowings and federal funds purchased totaled $191.0 million at September
30, 1996, compared to $14.1 million at December 31, 1993. The use of non-deposit
sources of funds is structured to complement the Banks' interest-rate risk
profile, and the cost of such borrowings is a principal consideration in the
Banks' loan and deposit pricing.

RESULTS OF OPERATIONS

SUMMARY. Net income increased by 16.7% to $5.8 million during the nine
months ended September 30, 1996, from $5.0 million during the comparable period
of 1995. Earnings per share during those periods were equal to $2.02 and $1.74
in 1996 and 1995, respectively. During 1995, net income increased by 12.9% to a
record $6.8 million or $2.38 per share. A year earlier, net income increased by
7.6% to $6.0 million, equal to $2.09 per share, from $5.6 million or $1.95 per
share in 1993.

The increases in net income principally reflect increases in average
earning assets that resulted from the acquisition of banks as well as the
successful implementation of the Alternate Loan Funding Strategy. Average
earning assets grew by 61.6% to $634.1 million during the first nine month
period of 1996 from $392.4

14
<PAGE> 17

million for the year ended December 31, 1993. Over that same period, the
Company's annualized net interest income increased by 51.6% to $33.5 million in
1996 from $22.1 million in 1993. In addition to an increase in the absolute
level of average earning assets since 1993, the mix of average earning assets
has shifted toward higher yielding loans from other earning assets. During the
nine months ended September 30, 1996, loans comprised 76.6% of total average
earning assets, up from 66.1% for the year ended December 31, 1993.

As a result of the Banks' ability to generate loans, principally single
family residential real estate mortgage loans, average earning assets increased
by 26.5% to $634.1 million during the nine-month period in 1996, from $501.3
million during the comparable period in 1995, and by 15.1% to $513.4 million
during 1995, from $446.0 million in 1994. During those respective periods, net
interest income increased by 21.3% and 11.3%. The recent NBC Acquisition also
contributed to the increase in average earning assets and net interest income
during 1996.

KEY PERFORMANCE RATIOS

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------- -----------------------
1996 1995 1995 1994 1993
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Return on
Average assets......................................... 1.16% 1.26% 1.25% 1.25% 1.33%
Average common equity.................................. 15.78 15.60 15.59 15.22 15.21
Income per common share(1)............................... $2.02 $1.74 $2.38 $2.09 $1.95
</TABLE>

- -------------------------
(1) Adjusted to give retroactive effect to 5% stock dividends in 1996 and 1995.

The increase in the Company's return on average equity, relative to its
return on average assets, reflects management's efforts to profitably maintain
or enhance financial leverage within management's established risk parameters.
As a result of the NBC Acquisition and the Alternate Loan Funding Strategy, the
Company's leverage ratio (average assets divided by average equity) increased to
13.66 during the nine months ended September 30, 1996. During 1995, the leverage
ratio was equal to 12.44, compared to 12.16 and 11.47 in 1994 and 1993,
respectively.

NET INTEREST INCOME. Tax equivalent net interest income increased by 21.1%
to $25.9 million during the nine months ended September 30, 1996, from $21.3
million during the comparable period a year earlier. The increase principally
reflects the $132.9 million increase in average earning assets generated by the
Alternate Loan Funding Strategy and the NBC Acquisition. Tax equivalent net
interest income as a percent of average earning assets declined to 5.45% during
the nine months ended September 30, 1996, from 5.69% during the comparable
period in 1995. Management attributes a portion of the 24 basis point decline to
the cost of non-deposit funds that were used to implement the Alternate Loan
Funding Strategy. The interest paid on unsecured borrowings that were used to
fund the NBC Acquisition offset a portion of the increase in tax equivalent net
interest income.

15
<PAGE> 18

The following table sets forth the average balance, the interest earned or
paid thereon and the effective interest rate for each major category of
interest-earning assets and interest-bearing liabilities for the nine months
ended September 30, 1996 and 1995.

AVERAGE BALANCES AND TAX EQUIVALENT RATES

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------------------------
1996 1995
------------------------------------- -------------------------------------
AVERAGE AVERAGE
BALANCE INTEREST YIELD/COST(3) BALANCE INTEREST YIELD/COST(3)
-------- -------- ------------- -------- -------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Loans -- all domestic(1)(2).... $485,407 $ 35,367 9.73% $369,777 $ 27,225 9.84%
Taxable securities............. 98,326 4,873 6.62 95,985 4,572 6.37
Tax-exempt securities(2)....... 37,618 2,522 8.96 30,315 2,163 9.54
Other investments.............. 12,777 636 6.65 5,197 264 6.79
-------- ------- -------- -------
Interest earning assets...... 634,128 43,398 9.14 501,274 34,224 9.13
------- -------
Cash and due from banks........ 19,792 15,944
Other assets, net.............. 18,913 14,046
-------- --------
Total assets.............. $672,833 $531,355
======== ========
LIABILITIES
Savings and NOW................ $242,641 4,484 2.47 $219,985 4,227 2.57
Time deposits.................. 178,671 7,114 5.32 138,871 4,966 4.78
Long-term debt................. 4,518 241 7.13
Other borrowings............... 133,447 5,709 5.72 80,178 3,688 6.15
-------- ------- -------- -------
Interest bearing
liabilities............... 559,277 17,548 4.19 439,034 12,881 3.92
------- -------
Demand deposits................ 56,687 44,022
Other liabilities.............. 7,603 5,559
Shareholders' equity........... 49,266 42,740
-------- --------
Total liabilities and
shareholders' equity.... $672,833 $531,355
======== ========
Net interest income....... $ 25,850 $ 21,343
======= =======
Net interest income as a
percent of earning
assets.................. 5.45% 5.69%
==== ====
</TABLE>

- -------------------------
(1) Interest on loans includes net origination fees totaling $2.4 million and
$2.0 million for the nine-month periods in 1996 and 1995, respectively.

(2) Interest on tax-exempt securities has been adjusted to reflect preferential
taxation. The adjustment assumes a marginal tax rate of 34% for each of the
nine-month periods.

(3) Interest income and expense for the nine-month periods have been annualized.

16
<PAGE> 19

Tax equivalent net interest income increased by 10.7% to $29.0 million
during 1995 and by 14.1% to $26.2 million in 1994. Such increases reflect
double-digit percentage increases in average earning assets during those
periods. Average earning assets increased by 15.1% to $513.4 million during
1995, and by 13.6% to $446.0 million during 1994. The Alternate Loan Funding
Strategy accounted for approximately 90% of the $67.4 million increase in
average earning assets during 1995, while the 1993 Acquisitions accounted for
approximately 70% of the $53.5 million increase in average earning assets for
the prior year.

AVERAGE BALANCES AND TAX EQUIVALENT RATES

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------
1995 1994 1993
---------------------------- ---------------------------- ----------------------------
AVERAGE YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST BALANCE INTEREST COST
-------- -------- ------ -------- -------- ------ -------- -------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans -- all
domestic(1)(2)............ $382,644 $ 37,654 9.84% $294,968 $ 28,936 9.81% $259,334 $ 26,001 10.03 %
Taxable securities.......... 93,064 5,919 6.36 108,905 6,537 6.00 88,869 5,976 6.73
Tax-exempt securities(2).... 31,516 2,914 9.25 29,763 2,857 9.60 28,881 2,761 9.56
Other investments........... 6,153 421 6.84 12,335 460 3.73 15,359 535 3.48
-------- ------- -------- ------- -------- -------
Interest earning assets... 513,377 46,908 9.14 445,971 38,790 8.70 392,443 35,273 8.99
------- ------- -------
Cash and due from banks..... 16,091 14,359 13,996
Other assets, net........... 14,115 21,491 16,226
-------- -------- --------
Total assets.......... $543,583 $481,821 $422,665
======== ======== ========
LIABILITIES
Savings and NOW............. $217,721 5,515 2.53 $213,590 4,819 2.26 $185,419 4,887 2.64
Time deposits............... 141,292 6,955 4.92 150,036 6,273 4.18 150,536 7,140 4.74
Long-term debt.............. 2,195 120 5.47 525 28 5.33
Other borrowings............ 89,048 5,430 6.10 28,481 1,373 4.82 8,010 250 3.12
-------- ------- -------- ------- -------- -------
Interest bearing
liabilities............. 448,061 17,900 4.00 394,302 12,585 3.19 344,490 12,305 3.57
------- ------- -------
Demand deposits............. 46,539 41,910 37,426
Other liabilities........... 5,296 5,989 3,900
Shareholders' equity........ 43,687 39,620 36,849
-------- -------- --------
Total liabilities and
shareholders'
equity............. $543,583 $481,821 $422,665
======== ======== ========
Net interest income... $ 29,008 $ 26,205 $ 22,968
======= ======= =======
Net interest income as
a percent of
earning
assets............. 5.65% 5.88% 5.85 %
</TABLE>

- -------------------------
(1) Interest on loans includes net origination fees totaling $2.7 million, $2.6
million, and $2.2 million in 1995, 1994, and 1993, respectively.

(2) Interest on tax-exempt securities has been adjusted to reflect preferential
taxation. The adjustment assumes a marginal tax rate of 34% for each of the
three years. For purposes of analysis, tax-exempt loans are included in tax-
exempt securities.

17
<PAGE> 20

Tax equivalent net interest income was equal to 5.65% of average earning
assets during 1995 compared to 5.88% and 5.85% in 1994 and 1993, respectively.
Management attributes the 23 basis point decline during 1995 to the average cost
of other borrowings utilized to fund its Alternate Loan Funding Strategy. In
view of the respective contributions to net income and the Company's return on
average equity, management believes that its Alternate Loan Funding Strategy is
consistent with its goal to profitably deploy capital.

The following table sets forth certain information regarding changes in
interest income and interest expense of the Company for the periods indicated.
For each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to: (i) changes in volume
(changes in volume multiplied by the prior period's rate); and (ii) changes in
rates (change in rate multiplied by the prior period's volume).

CHANGE IN TAX EQUIVALENT NET INTEREST INCOME

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
NINE MONTHS ENDED ---------------------------------------------------------------
SEPTEMBER 30,
1996 COMPARED TO 1995 1995 COMPARED TO 1994 1994 COMPARED TO 1993
--------------------------- ----------------------------- -----------------------------
VOLUME RATE NET VOLUME RATE NET VOLUME RATE NET
------ ----- ------ ------ ------- ------ ------ ------- ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase (decrease) in
interest income(1)
Loans -- all domestic........ $8,428 $(286) $8,142 $8,627 $ 91 $8,718 $3,506 $ (571) $2,935
Taxable securities........... 113 188 301 (991) 373 (618) 1,255 (694) 561
Tax-exempt securities(2)..... 496 (137) 359 165 (108) 57 85 11 96
Other investments............ 377 (5) 372 (303) 264 (39) (111 ) 36 (75)
------ ----- ------ ------ ------- ------ ------ ------- ------
Total interest income.... 9,414 (240) 9,174 7,498 620 8,118 4,735 (1,218) 3,517
------ ----- ------ ------ ------- ------ ------ ------- ------
Increase (decrease) in
interest expense
Savings and NOW.............. 423 (166) 257 95 601 696 688 (756) (68)
Time deposits................ 1,539 609 2,148 (382) 1,064 682 (24) (843) (867)
Long-term debt............... 241 0 241 (120) 0 (120) 91 1 92
Other borrowings............. 2,295 (274) 2,021 3,594 463 4,057 930 193 1,123
------ ----- ------ ------ ------- ------ ------ ------- ------
Total interest expense... 4,498 169 4,667 3,187 2,128 5,315 1,685 (1,405) 280
------ ----- ------ ------ ------- ------ ------ ------- ------
Net interest income...... $4,916 $(409) $4,507 $4,311 $(1,508) $2,803 $3,050 $ 187 $3,237
====== ===== ====== ====== ======= ====== ====== ======= ======
</TABLE>

- -------------------------
(1) The change in interest due to changes in both balance and rate has been
allocated to change due to balance and change due to rate in proportion to
the relationship to the absolute dollar amounts of change in each.

(2) Interest on tax exempt securities has been adjusted to reflect preferential
taxation. The adjustment assumes a marginal tax rate of 34% for each of the
three years.

The following table sets forth the composition of average interest-earning
assets and interest-bearing liabilities as a percent of average total
interest-earning assets for each of the periods indicated.

COMPOSITION OF AVERAGE EARNING ASSETS AND INTEREST PAYING LIABILITIES

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
----------------- ----------------------------
1996 1995 1995 1994 1993
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
As a percent of average earning assets
Loans -- all domestic.................................................. 76.55% 73.77% 74.53% 66.14% 66.08%
Other earning assets................................................... 23.45 26.23 25.47 33.86 33.92
------ ------ ------ ------ ------
Average earning assets............................................. 100.00% 100.00% 100.00% 100.00% 100.00%
====== ====== ====== ====== ======
Savings and NOW........................................................ 38.26% 43.89% 42.41% 47.89% 47.25%
Time deposits.......................................................... 28.18 27.70 27.52 33.64 38.36
Other borrowings and long-term debt.................................... 21.76 16.00 17.35 6.88 2.17
------ ------ ------ ------ ------
Average interest bearing liabilities............................... 88.20% 87.59% 87.28% 88.41% 87.78%
====== ====== ====== ====== ======
Earning asset ratio..................................................... 94.25% 94.34% 94.44% 92.56% 92.85%
Free-funds ratio(1)..................................................... 11.80 12.41 12.72 11.59 12.22
</TABLE>

- -------------------------
(1) Represents the percentage of average earning assets that are funded by
non-interest bearing liabilities and capital.

18
<PAGE> 21

Increases in loans as a percent of average earning assets has had a
favorable impact on tax equivalent net interest income as a percent of average
earning assets. For the first nine months of 1996 and 1995, loans were equal to
approximately 76.6% and 73.8% of average earning assets, respectively. Loans
were equal to approximately 74.5% of average earning assets in 1995 and 66.1% in
both 1994 and 1993. Management expects that the consummation of the pending
acquisition of the FOA Branches will initially reduce loans as a percent of
average earning assets and will have a corresponding negative impact on the
Company's tax equivalent net interest income as a percent of average earning
assets. Over time, management expects to reinvest the assets into loans
following consummation of the transaction.

PROVISION FOR LOAN LOSSES. In addition to a subjective analysis of general
and local economic conditions, management's assessment of the allowance for loan
losses is based upon the amount and composition of loan balances, a systematic
review of specific credits and historical loss experience, as well as the
absolute level of nonperforming and impaired loans.

The provision for loan losses totaled $942,000 during the nine months ended
September 30, 1996. The increase from $477,000 during the comparable period in
1995 resulted from the application of management's allocation methodology (as
described above) to the loans associated with the NBC Acquisition and the
increase in loans, excluding loans held for sale ("Portfolio Loans").

The provision for loan losses totaled $636,000 in 1995, compared to
$473,000 in 1994 and $657,000 in 1993. Increases in the provision during 1995
principally reflect the increase in Portfolio Loans. The decrease in the
provision during 1994 reflects a subsequent decline in substandard assets that
had been acquired as a result of the 1993 Acquisitions and the KSB Acquisition
in 1994, and the corresponding increase in the unallocated portion of the
allowance for loan losses.

NONINTEREST INCOME. Noninterest income increased by 49.9% during the
nine-months ended September 30, 1996, from $2.7 million during the comparable
period in 1995. The increase reflects increases in net gains on the sale of real
estate mortgage loans, as well as increases in service charges on deposit
accounts and other income.

Noninterest income totaled $3.8 million in 1995 compared to $3.1 million
and $3.9 million in 1994 and 1993, respectively. The increase in net gains on
real estate mortgage loans accounted for approximately 72% of the $665,000
increase in noninterest income during 1995. A year earlier, a decline in net
gains on the sale of such loans and net losses on the sale of securities
available for sale accounted for the $797,000 decrease in noninterest income.

The following table sets forth the principal components of noninterest
income for each of the periods indicated.

NONINTEREST INCOME

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
---------------- --------------------------
1996 1995 1995 1994 1993
------ ------ ------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Service charges on deposit accounts................. $1,641 $1,439 $1,919 $1,892 $1,589
Net gains (losses) on asset sales
Real estate mortgage loans........................ 1,251 405 728 249 721
Securities........................................ (130) (110) (120) (174) 637
Real estate mortgage loan servicing................. 299 273 371 335 217
PrimeVest commission................................ 82 55 73 120 139
Other............................................... 838 594 795 679 595
------ ------ ------ ------ ------
Total noninterest income....................... $3,981 $2,656 $3,766 $3,101 $3,898
====== ====== ====== ====== ======
</TABLE>

Service charges on deposit accounts, the largest component of noninterest
income, totaled $1.6 million and $1.4 million during the nine months ended
September 30, 1996 and 1995, respectively. The $202,000 increase in service
charges reflects the NBC Acquisition. During 1995, such service charges totaled
$1.9 million, essentially unchanged from 1994. The $303,000 increase to $1.9
million in 1994 from $1.6 million in 1993, principally reflects the impact of
the 1993 Acquisitions.

19
<PAGE> 22

Net gains on the sale of real estate mortgage loans totaled $1.3 million
and $405,000 during the nine months ended September 30, 1996 and 1995,
respectively. Such gains totaled $728,000 in 1995, compared to $249,000 in 1994
and $721,000 in 1993.

Although the majority of the 209% increase in net gains on the sale of real
estate loans during 1996 reflects favorable economic conditions and an increase
in loans sold, management attributes 45% of the increase to the impact of
Statement of Financial Accounting Standards No. 122, "Accounting for Mortgage
Servicing Rights" ("SFAS #122"), and the increased sale of related servicing
rights. See "Statements of Financial Accounting Standards."

In addition to an increase in loans sold, the 192% increase during 1995
reflects an increase in net gains as a percent of real estate mortgage loans
sold. The overall decline in net gains during 1994 reflects the combined effects
of a decrease in loans sold as well as a decrease in net gains as a percent of
loans sold.

The following table sets forth certain information with respect to the
origination and sale of real estate mortgage loans, including the net gains
recognized on the sale of such loans.

NET GAINS ON THE SALE OF REAL ESTATE MORTGAGE LOANS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
--------------------- --------------------------------
1996 1995 1995 1994 1993
-------- -------- -------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Real estate mortgage loan
originations......................... $166,100 $118,100 $163,500 $97,800 $80,200
Real estate mortgage loan sales........ 80,000 33,400 52,000 38,100 50,100
Real estate mortgage loan servicing
rights sold.......................... 28,800 11,900 19,700 1,500 500
Net gains on the sale of real estate
mortgage loans....................... 1,251 405 728 249 721
Net gains as a percent of real estate
mortgage loan sales.................. 1.56% 1.21% 1.40% 0.65% 1.44%
</TABLE>

Consistent with management's desire to maintain profitable leverage, the
Banks continue to retain rate-sensitive real estate mortgage loans and sell the
majority of fixed-rate obligations. See "Financial Condition -- Asset/Liability
Management." Accordingly, the volume of loans sold is dependent upon the Banks'
ability to sustain or increase the origination of real estate mortgage loans as
well as consumer demand for fixed-rate loans. Net gains on the sale of such
loans are also dependent upon economic and competitive factors as well as the
Banks' ability to effectively manage exposure to changes in interest rates.

To maintain customer relationships, the Banks have historically retained
servicing rights on real estate mortgage loans sold. During the nine months
ended 1996 and the year ended 1995, however, the Banks sold the related
servicing rights on $28.8 million and $19.7 million, respectively, of real
estate mortgage loans, principally loans underwritten pursuant to government
guarantees and loans that have been originated in markets that are not served by
the Banks' branch networks.

The Company realized net losses of $130,000 and $110,000 on the sale of
securities available for sale during the nine months ended September 30, 1996
and 1995, respectively. The Company also realized net losses of $120,000 in 1995
and $174,000 in 1994 compared to net gains of $637,000 in 1993. Future gains and
losses will be dependent upon the Banks' asset/liability management needs as
well as the slope of the yield curve, the level of interest rates and other
pertinent factors. See "Financial Condition -- Asset/Liability Management."

NONINTEREST EXPENSE. Noninterest expense totaled $19.8 million and $15.9
million during the nine months ended September 30, 1996 and 1995, respectively.
Noninterest expense totaled $21.7 million in 1995 compared to $19.5 million in
1994 and $17.5 million in 1993. Salaries and benefits are the largest component
of noninterest expense and account for the majority of the increase in total
noninterest expense. A reduction in FDIC insurance assessments, however, limited
the increase in total noninterest expense.

20
<PAGE> 23

The following table sets forth the principal components of noninterest
expense for each of the periods indicated.

NONINTEREST EXPENSE

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
------------------ -----------------------------
1996 1995 1995 1994 1993
------- ------- ------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Salaries....................................... $ 7,450 $ 5,887 $ 8,005 $ 7,817 $ 6,593
Performance-based compensation and benefits.... 2,280 1,703 2,351 1,052 1,182
Other benefits................................. 1,674 1,313 1,807 1,693 1,541
------- ------- ------- ------- -------
Total salaries and benefits............... 11,404 8,903 12,163 10,562 9,316
Occupancy, net................................. 1,458 1,135 1,548 1,392 1,237
Furniture and fixtures......................... 1,337 975 1,345 1,248 968
Loan and collection............................ 396 748 1,030 626 724
Deposit insurance.............................. 92 454 499 966 858
Other.......................................... 5,117 3,682 5,117 4,709 4,432
------- ------- ------- ------- -------
Total noninterest expense................. $19,804 $15,897 $21,702 $19,503 $17,535
======= ======= ======= ======= =======
</TABLE>

The Company and the Banks maintain compensation policies and practices that
are intended to provide incentives for superior performance and align the
interests of officers and employees with those of the Company's shareholders.
Such "pay for performance" compensation plans include annual cash performance
awards, the Employee Stock Ownership Plan, the Employee Stock Option Plan and
the Incentive Share Grant Plan. Including commissions relating to the
origination of real estate mortgage loans, aggregate performance-based
compensation accounts for approximately 23% of the $2.5 million increase in
salaries and benefits during the nine months ended September 30, 1996, and
approximately 81% of the $1.6 million increase during 1995.

The NBC Acquisition and the 1993 Acquisitions also had a substantive impact
on salaries and benefits as well as total noninterest expense. Management
estimates that the NBC Acquisition accounted for 33% and 45% of the increase in
salaries and benefits and total noninterest expense, respectively, during the
nine months ended September 30, 1996. During 1994, all of the increase in
salaries and benefits and 90% of the increase in total noninterest expense can
be attributed to the 1993 Acquisitions.

Costs associated with new branch facilities, a write down of other real
estate as well as the introduction of the "EZ Money" check card and related ATM
conversions have also contributed to the increases in total noninterest expense
during the nine months ended September 30, 1996. Costs associated with the new
loan production offices or otherwise relating to the origination of real estate
mortgage loans contributed to the increase in occupancy, furniture and fixtures
and other noninterest expense during 1995. Environmental remediation costs
associated with two foreclosed properties also contributed approximately
$200,000 to the increase in noninterest expense. These remediation costs were
covered under the Michigan Underground Storage Tank Financial Assurance Fund
("MUSTFA"). MUSTFA announced that it was unable to fund all claims, however, and
the Company has provided for all remaining remediation costs as estimated by
environmental engineers.

FINANCIAL CONDITION

SUMMARY. The Banks have committed significant resources to loan origination
efforts, including two new loan production offices during the second quarter of
1995. Portfolio Loans totaled $565.4 million at September 30, 1996, compared to
$418.0 million and $336.7 million at December 31, 1995 and 1994, respectively.
Excluding the impact of the NBC Acquisition, rate-sensitive real estate mortgage
loans accounted for approximately 67% and 72% of the increase in Portfolio Loans
during the first nine months of 1996 and for all of 1995, respectively.

21
<PAGE> 24

In addition to the proceeds from security sales and maturities, the Banks
have relied on other borrowings to fund the increase in Portfolio Loans. The use
of such non-deposit funds, principally advances from the FHLB, complements the
Banks' core deposits and may further assist the Banks' efforts to manage their
exposure to changes in interest rates. See "-- Asset/Liability Management." Such
advances totaled $131.0 million at September 30, 1996, compared to $103.0
million and $40.0 million at December 31, 1995 and 1994, respectively.

SECURITIES. The Banks maintain diversified securities portfolios that
include obligations of the U.S. Treasury and government-sponsored agencies as
well as securities issued by states and political subdivisions and
mortgage-backed securities. Securities available for sale are carried at fair
value and unrealized gains and losses, after consideration of applicable federal
income taxes, are recognized as a separate component of shareholders' equity.

Management has the intent and the Banks have the ability to hold other
securities to maturity. These securities are carried at amortized cost without
adjustment for unrealized gains or losses. Although there are no current plans
to sell securities, management continues to evaluate the Banks' asset/liability
management needs and attempts to maintain a portfolio structure that will
improve earnings while maintaining sufficient liquidity and cash flow to fund
loans.

The following tables set forth the book value of securities at the
specified dates and certain information with respect to the securities
portfolios, including gross unrealized gains and losses.

SECURITIES

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, ------------------------------
1996 1995 1994 1993
------------- ------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury....................................... $ 22,433 $23,272 $34,724 $ 30,330
U.S. Government agencies............................ 21,205 6,623 0 0
States and political subdivisions................... 18,669 9,290 0 0
Mortgage-backed securities.......................... 56,487 37,722 11,684 0
Other securities.................................... 3,693 10,646 6,348 0
-------- ------- ------- --------
Total.......................................... $ 122,487 $87,553 $52,756 $ 30,330
======== ======= ======= ========
HELD TO MATURITY
U.S. Treasury....................................... $ 0 $ 0 $ 5,738 $ 29,385
U.S. Government agencies............................ 1,485 2,559 11,004 6,601
States and political subdivisions................... 20,137 20,142 27,240 27,241
Mortgage-backed securities.......................... 3,865 4,487 26,545 35,295
Other Securities.................................... 1,387 718 7,194 7,295
-------- ------- ------- --------
Total.......................................... $ 26,874 $27,906 $77,721 $105,817
======== ======= ======= ========
</TABLE>

<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED ---------------- FAIR
COST GAINS LOSSES VALUE
--------- ------ ------ --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE
September 30, 1996...................................... $ 122,231 $ 980 $ 724 $122,487
December 31, 1995....................................... 86,471 1,538 456 87,553
December 31, 1994....................................... 55,968 0 3,212 52,756
December 31, 1993....................................... 30,330 120 0 30,450
SECURITIES HELD TO MATURITY
September 30, 1996...................................... $ 26,874 $ 891 $ 67 $ 27,698
December 31, 1995....................................... 27,906 1,157 32 29,031
December 31, 1994....................................... 77,721 976 1,247 77,450
December 31, 1993....................................... 107,261 4,386 472 111,175
</TABLE>

22
<PAGE> 25

The following table sets forth certain information with respect to the
proceeds from the sale of securities available for sale, including related
realized gains and losses.

PROCEEDS FROM THE SALE OF SECURITIES AVAILABLE FOR SALE

<TABLE>
<CAPTION>
REALIZED
---------------
PROCEEDS GAINS LOSSES
-------- ----- ------
(IN THOUSANDS)
<S> <C> <C> <C>
NINE MONTHS ENDED
September 30, 1996................................................... $ 15,907 $ 44 $174
September 30, 1995................................................... 13,152 7 117
YEAR ENDED
December 31, 1995.................................................... $ 14,054 $ 8 $128
December 31, 1994.................................................... 28,384 228 402
December 31, 1993.................................................... 34,341 658 27
</TABLE>

LOAN PORTFOLIOS. Management believes that the stable and diversified
economies of the Banks' principal markets provide attractive lending
opportunities. In addition to the communities served by the Banks' branch
networks and loan production offices, the principal lending markets include
nearby communities and metropolitan areas. Subject to established underwriting
criteria, the Banks may also participate in commercial lending transactions with
certain non-affiliated banks and purchase real estate mortgage loans from
third-party originators.

Management believes that its decentralized structure provides the Banks
with important advantages in serving the needs of its principal lending markets.
Although the management and Board of Directors of each of the Banks retain
authority and responsibility for all credit decisions, each of the Banks has
adopted uniform underwriting standards. The Company's loan committee and the
centralization of credit services promote compliance with these underwriting
standards and provide internal controls that are consistent with the needs of a
decentralized management structure. The Company's centralized credit services,
which include credit analysis and commercial loan review, also provide economies
of scale. The centralization of retail loan services further provides for
consistent service quality and facilitates compliance with applicable consumer
protection laws and regulations.

The following table sets forth the principal components of Portfolio Loans
at the dates indicated.

LOAN PORTFOLIO COMPOSITION

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
SEPTEMBER 30, 1996 1995 1994
------------------- ------------------- -------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
-------- ------- -------- ------- -------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Real estate
Residential first mortgages........ $263,224 46.6% $211,690 50.6% $158,432 47.1%
Residential home equity............ 31,528 5.6 19,733 4.7 17,704 5.3
Construction and land
development..................... 46,350 8.2 29,328 7.0 27,289 8.1
Other.............................. 84,428 14.9 56,675 13.6 44,982 13.4
Consumer............................. 92,137 16.3 64,821 15.5 49,075 14.6
Commercial........................... 31,534 5.6 23,403 5.6 23,388 6.9
Agricultural......................... 16,217 2.8 12,394 3.0 15,855 4.6
-------- ----- -------- ----- -------- -----
Total loans..................... $565,418 100.0% $418,044 100.0% $336,725 100.0%
======== ===== ======== ===== ======== =====
</TABLE>

23
<PAGE> 26

The following table sets forth the principal components of nonperforming
assets at the dates indicated.

NONPERFORMING ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------------------
1996 1995 1994 1993
------------- ------ ------ ------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Non-accrual loans....................................... $ 2,089 $1,886 $2,052 $1,707
Loans 90 days or more past due and still accruing
interest.............................................. 1,159 427 254 408
Restructured loans...................................... 203 247 528 1,098
------ ------ ------ ------
Total nonperforming loans.......................... 3,451 2,560 2,834 3,213
Other real estate....................................... 956 760 1,381 2,647
------ ------ ------ ------
Total nonperforming assets......................... $ 4,407 $3,320 $4,215 $5,860
====== ====== ====== ======
As a percent of total loans
Nonperforming loans................................... 0.61% 0.61% 0.84% 1.14%
Nonperforming assets.................................. 0.78 0.79 1.25 2.08
</TABLE>

The increases in nonperforming loans and assets during 1996 were the result
of the NBC Acquisition. In the absence of that transaction, nonperforming loans
would have declined to $2.5 million, equal to 0.52% of Portfolio Loans at
September 30, 1996, and nonperforming assets would have declined to $3.3 million
or 0.68% of Portfolio Loans.

The consistent decline in nonperforming loans and assets during 1995 and
1994 largely reflects a decrease in substandard assets originally acquired in
connection with the KSB Acquisition in 1994, as well as the 1993 Acquisitions.
Nonperforming assets associated with these acquisitions totaled $1.4 million,
$2.3 million, and $2.0 million at December 31, 1995, 1994, and 1993,
respectively.

Impaired loans totaled approximately $2.2 million at September 30, 1996. In
addition to certain nonperforming loans, such impaired loans include commercial
and agricultural loans totaling $800,000 that have been separately identified as
impaired. Certain impaired loans with a balance of approximately $1.0 million at
September 30, 1996, had specific allocations of the allowance for loan losses
totaling approximately $125,000. The Company's average investment in impaired
loans was approximately $2.5 million during the nine-month period ended
September 30, 1996, and interest income recognized on impaired loans during that
period totaled approximately $110,000.

24
<PAGE> 27

The following table sets forth an analysis of the changes in the allowance
for loan losses at each of the dates indicated.

ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------------------------------------------------
1996 1995 1994 1993(1) 1992(1) 1991(1)
------------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Loans outstanding at the end of the
period
(net of unearned fees).............. $ 575,807 $434,091 $342,658 $288,643 $261,634 $275,144
======== ======== ======== ======== ======== ========
Average loans outstanding for the
period
(net of unearned fees).............. $ 485,407 $382,644 $294,968 $259,334 $267,801 $260,594
======== ======== ======== ======== ======== ========
Balance of allowance for loan losses
at beginning of period.............. $ 5,243 $ 5,054 $ 5,053 $ 4,023 $ 3,784 $ 3,541
-------- -------- -------- -------- -------- --------
Loans charged-off
Real estate......................... 6 24 14 38 69 51
Commercial and agricultural......... 58 113 311 306 566 421
Installment......................... 601 575 546 370 581 613
-------- -------- -------- -------- -------- --------
Total loans charged-off........... 665 712 871 714 1,216 1,085
-------- -------- -------- -------- -------- --------
Recoveries of loans previously
charged-off.........................
Real estate......................... 8 28 6 11 26 3
Commercial and agricultural......... 82 115 151 156 91 123
Installment......................... 180 122 242 164 113 189
-------- -------- -------- -------- -------- --------
Total recoveries.................. 270 265 399 331 230 315
-------- -------- -------- -------- -------- --------
Net loans charged-off............. 395 447 472 383 986 770
Additions to allowance charged to
operating expense................... 942 636 473 657 1,225 1,013
Allowance on loans acquired........... 930 0 0 756 0 0
-------- -------- -------- -------- -------- --------
Balance at end of period.............. $ 6,720 $ 5,243 $ 5,054 $ 5,053 $ 4,023 $ 3,784
======== ======== ======== ======== ======== ========
Net loans charged-off as a percent
of average loans outstanding for
the period(2)....................... 0.11% 0.12% 0.16% 0.15% 0.37% 0.30%
Allowance for loan losses as a percent
of loans outstanding at the end of
the period.......................... 1.17 1.21 1.48 1.75 1.54 1.38
Allowance for loan losses as a percent
of nonperforming assets............. 194.73 204.80 178.33 157.27 126.75 78.90
</TABLE>

- -------------------------
(1) Restated to reflect an acquisition accounted for as a pooling of interests.
See Note 2 to Consolidated Financial Statements.

(2) September 30, 1996 information is annualized.

The allowance for loan losses is maintained at a level that management
considers appropriate, based upon its assessment of relevant circumstances, by
charges to the associated provision for loan losses. (See "-- Provision for Loan
Losses.") In performing its assessment, management allocates a portion of the
allowance to specific loans and loan portfolios. Although the allowance for loan
losses has declined as a percent of Portfolio Loans, the unallocated portion of
the allowance increased to 57.3% of the total allowance at September 30, 1996,
from 41.5% at December 31, 1993.

The following table sets forth management's allocation of the allowance for
loan losses to specific loans and loan portfolios for each of the periods
indicated.

ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------------------
1996 1995 1994 1993
------------- ------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Commercial and agricultural............................. $ 1,761 $1,612 $1,655 $2,222
Real estate mortgage.................................... 229 162 177 270
Installment............................................. 879 597 474 464
Unallocated............................................. 3,851 2,872 2,748 2,097
------ ------ ------ ------
Total.............................................. $ 6,720 $5,243 $5,054 $5,053
====== ====== ====== ======
</TABLE>

25
<PAGE> 28

Loans charged against the allowance for loan losses, net of recoveries
("Net Losses"), were $395,000 during the nine months ended September 30, 1996,
compared to $282,000 during the comparable period of 1995. The NBC Acquisition
accounted for $90,000 of the $113,000 increase in Net Losses during 1996. Net
Losses in 1995 were $447,000 compared to $472,000 and $383,000 in 1994 and 1993,
respectively. Management estimates that Net Losses relating to loans that were
acquired as a result of the 1993 Acquisitions and the KSB Acquisition in 1994
were $50,000 in 1995, $130,000 in 1994, and $60,000 in 1993.

DEPOSITS AND BORROWINGS. Deposits totaled $541.8 million at September 30,
1996, compared to $411.6 million at December 31, 1995. The NBC Acquisition
accounted for the majority of the $130.2 million increase in deposits.
Notwithstanding the purchase of a branch facility with deposits totaling $14.4
million during 1995, total deposits at December 31, 1995 increased only slightly
from $409.5 million one year earlier.

The following table sets forth average deposit balances and the weighted
average rates paid thereon for the dates indicated.

AVERAGE DEPOSITS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
SEPTEMBER 30,
1996 1995 1994 1993
---------------- ---------------- ---------------- ----------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE BALANCE RATE
-------- ---- -------- ---- -------- ---- -------- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Noninterest bearing demand.......... $ 56,687 $ 46,539 $ 41,910 $ 37,426
Savings and NOW..................... 242,641 2.47% 217,721 2.53% 213,590 2.26% 185,419 2.64%
Time deposits....................... 178,671 5.32 141,292 4.92 150,036 4.18 150,536 4.74
-------- -------- -------- --------
Total........................... $477,999 3.24% $405,552 3.08% $405,536 2.74% $373,381 3.22%
======== ======== ======== ========
</TABLE>

The following table summarizes time deposits in amounts of $100,000 or more
by time remaining until maturity as of September 30, 1996.

TIME DEPOSITS OVER $100,000

<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Three months or less................................. $ 12,779
Over three through six months........................ 2,718
Over six months through one year..................... 2,245
Over one year........................................ 7,751
-------
Total........................................... $ 25,493
=======
</TABLE>

The Banks' competitive position within many of the markets served by the
branch networks may limit the ability to materially increase deposits without
adversely impacting the weighted-average cost of core deposits. Accordingly, the
Banks have relied on other borrowed funds, principally advances from the FHLB,
to fund loans as part of its Alternate Loan Funding Strategy, while utilizing
pricing strategies that are intended to reduce the weighted-average cost of core
deposits. The use of non-deposit funds is structured to complement the Banks'
existing interest rate risk profile and may further reduce the Banks' exposure
to depositors' options to withdraw funds prior to maturity.

The Company utilizes federal funds purchased and other borrowings,
including FHLB advances, to fund a portion of its earning assets. During the
nine months ended September 30, 1996, such other borrowings funded approximately
21.8% of average earning assets compared to 17.4% and 6.9% during the years
ended December 31, 1995 and 1994, respectively.

FHLB advances are secured by the Banks' unencumbered qualifying real estate
mortgage loans as well as certain securities equal to 170% of outstanding
advances. To increase its aggregate borrowing capacity management may elect to
secure FHLB advances by pledging specific collateral representing 105% to 125%
of outstanding advances. Management believes brokered certificates of deposit to
be a viable alternative to further diversify the Banks' funding sources.

26
<PAGE> 29

CAPITAL RESOURCES. The ability to profitably deploy the capital generated
by the Company's results of operations or otherwise maintain financial leverage
is critical to management's mission to create value for the Company's
shareholders. During periods when management believes there has been an absence
of suitable acquisition candidates, the Company's Alternate Loan Funding
Strategy has made important contributions to the Company's net income and return
on average equity. In view of the franchise value associated with core deposits
and other customer relationships, management believes that its approach to
acquisitions has also provided value to the Company's shareholders.

The following table sets forth the Company's capital ratios at the dates
indicated.

CAPITAL RATIOS

<TABLE>
<CAPTION>
DECEMBER 31,
SEPTEMBER 30, --------------
1996 1995 1994
------------- ----- -----
<S> <C> <C> <C>
Shareholders' equity to total assets...................................... 6.40% 7.97% 7.81%
Leverage ratio............................................................ 5.23 7.58 7.40
Tier 1 capital to risk-weighted assets.................................... 8.18 11.49 11.90
Total risk-based capital to risk-weighted assets.......................... 9.44 12.75 13.03
</TABLE>

The Company's dividend policies and its share repurchase plan have been
integral components of management's efforts to maintain profitable financial
leverage. Cash dividends declared were equal to 36.5% of earnings for the first
nine months of 1996, 36.8% and 34.6% for the years ended December 31, 1995 and
1994, respectively. Although there are no current plans to repurchase shares of
its capital stock, the Company purchased 35,900 and 40,000 shares of its Common
Stock during 1995 and 1994, respectively.

Shareholders' equity totaled $50.7 million at September 30, 1996, compared
to $47.0 million and $40.3 million at December 31, 1995 and 1994, respectively.
The increase in shareholders' equity reflects the retention of earnings as well
as the value of shares of Common Stock that have been issued pursuant to the
Incentive Share Grant Plan and the Company's various stock option plans.

As a result of the NBC Acquisition, shareholders' equity declined to 6.40%
of total assets at September 30, 1996, compared to 7.97% and 7.81% at December
31, 1995, and 1994, respectively. In the absence of that transaction, however,
shareholders' equity would have been largely unchanged from December 31, 1995.

ASSET/LIABILITY MANAGEMENT. The asset/liability management efforts of the
Company and the Banks are intended to identify and evaluate opportunities to
structure the balance sheet in a manner that is consistent with management's
mission to maintain profitable financial leverage within established risk
parameters. Accordingly, management's evaluations of alternate strategies
carefully consider the likely impact on the Banks' risk profile as well as the
anticipated contributions to earnings.

Management employs simulation analyses to evaluate the potential changes in
the Banks' net interest income and market value of portfolio equity that result
from changes in interest rates. Such analyses further anticipate the potential
changes in the slope of the U.S. Treasury yield curve as well as changes in
prepayment rates on certain assets and premature withdrawals of certificates of
deposit that will likely accompany changes in interest rates.

Consistent with management's intent to maintain profitable financial
leverage, the marginal cost of non-deposit funds is a principal consideration in
the Banks' decision to sell or retain real estate mortgage loans. Marginal
funding costs are also an integral component in pricing Portfolio Loans.
Management's ongoing evaluations have determined that the retention of 15- and
30-year fixed-rate real estate mortgage loans is not consistent with its goal to
profitably deploy capital or the Banks' asset/liability management needs.
Accordingly, the majority of such loans are sold to mitigate exposure to changes
in interest rates. Adjustable-rate and balloon real estate mortgage loans may,
however, be profitably funded with FHLB advances and the retention of such loans
is a principal focus of the Alternate Loan Funding Strategy. See "Results of
Operations--Noninterest Income."

27
<PAGE> 30

The following table sets forth the anticipated maturity or repricing,
including estimated prepayments, of interest-earning assets and interest-bearing
liabilities at September 30, 1996.

INTEREST RATE SENSITIVITY

<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------------------------------------------------
DAYS
------------------------------------------ YEARS
91 -- 181 -- -------------------
0 -- 30 31 -- 90 180 365 1 -- 5 5+ TOTAL
-------- -------- -------- --------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans and loans held for sale........... $102,929 $ 44,398 $ 52,012 $ 79,531 $212,672 $ 84,265 $575,807
Taxable securities...................... 12,312 7,593 5,475 6,680 46,436 42,257 120,753
Tax-exempt securities................... 799 15 294 1,714 16,570 19,414 38,806
-------- -------- -------- --------- -------- -------- --------
Interest earning assets............... 116,040 52,006 57,781 87,925 275,678 145,936 735,366
-------- -------- -------- --------- -------- --------
Noninterest earning assets.............. 57,786
--------
Total Assets........................ $793,152
========
LIABILITIES AND SHAREHOLDERS' EQUITY
Demand, savings and NOW................. 42,892 12,235 17,987 29,291 104,521 125,600 $332,526
Time deposits........................... 20,083 26,933 32,435 45,095 79,458 5,251 209,255
Other borrowings........................ 54,458 70,501 3,000 31,000 32,000 0 190,959
-------- -------- -------- --------- -------- -------- --------
Total deposits and other
borrowings........................ 117,433 109,669 53,422 105,386 215,979 130,851 732,740
-------- -------- -------- --------- -------- --------
Other liabilities and shareholders'
equity.............................. 60,412
--------
Total Liabilities and
Shareholders' Equity.............. $793,152
========
RATE SENSITIVITY GAP AND RATIOS
Gap for period........................ $ (1,393) $(57,663) $ 4,359 $(17,461) $ 59,699 $ 15,085
======== ======== ======== ========= ======== ========
Cumulative gap........................ $ (1,393) $(59,056) $(54,697) $(72,158) $(12,459) $ 2,626
======== ======== ======== ========= ======== ========
Ratio of rate-sensitive assets to
rate-sensitive liabilities for
period.............................. 98.8% 47.4% 108.2% 83.4 % 127.6% 111.5%
Cumulative ratio of rate-sensitive
assets to rate-sensitive
liabilities......................... 98.8 74.0 80.5 81.3 97.9 100.4
</TABLE>

STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS

The Company adopted SFAS #122 effective January 1, 1996. SFAS #122 requires
the Banks to recognize as separate assets the rights to service mortgage loans
for others that have been acquired through either a purchase or origination of a
loan. The fair value of capitalized originated mortgage servicing rights has
been determined based on market value quotes for similar servicing. These
mortgage servicing rights are amortized in proportion to and over the period of
estimated net loan servicing income. SFAS #122 also requires the Banks to assess
these mortgage servicing rights for impairment based on the fair value of those
rights. For purposes of measuring impairment, the risk characteristics used by
the Banks include the underlying loans' interest rates, term of loan and loan
types.

The Banks capitalized approximately $258,000 of originated servicing rights
during the nine months ended September 30, 1996, of which approximately $34,000
has been amortized.

The Company also adopted Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation," ("SFAS #123"), effective January
1, 1996. SFAS #123 encourages companies to adopt a fair value method of
accounting for stock compensation plans. Those companies not adopting a fair
value method are required to make pro-forma disclosures of net income and
earnings per share, on an annual basis, as if they had adopted the fair value
accounting method. Management has elected the pro-forma disclosure method and
will do so on an annual basis.

28
<PAGE> 31

BUSINESS

This section contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Actual results could differ
materially from those projected in such forward-looking statements as a result
of, among other things, the factors set forth in the section entitled "Risk
Factors."

GENERAL

The Company is a bank holding company with four wholly owned subsidiary
banks engaged in the business of retail and commercial banking in portions of
Michigan's lower peninsula. Headquartered in Ionia, Michigan, the Company was
formed in 1973 as the parent company of Independent Bank. Each of the Banks is a
state chartered Michigan banking corporation, the business of each of which is
described in more detail below.

Collectively, the Banks serve over 45 communities through their four main
offices and a total of 45 branches and five loan production offices. Management
attributes the Company's success to its consistent application of community
banking practices in predominantly rural and suburban markets. The Company's
decentralized management structure, which empowers and encourages local decision
making, represents the core of the Company's community banking philosophy. This
autonomy allows local bank management to better anticipate and respond to
customer demands and thereby enhances and improves customer service and
convenience, the principal means by which the Banks compete in the delivery of
financial services.

The Company's principal sources of revenue, on a consolidated basis, are
interest and fees on loans, other interest income and non-interest income. The
sources of income for the three most recent years, and each of the nine-month
periods ended September 30, 1995 and 1996 are as follows:

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEARS ENDED DECEMBER
SEPTEMBER 30, 31,
-------------- -----------------------
1996 1995 1995 1994 1993
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Interest and fees on loans............................... 76.4% 75.6% 76.1% 71.1% 68.3%
Other interest income.................................... 15.1 17.0 16.3 21.3 21.5
Non-interest income...................................... 8.5 7.4 7.6 7.6 10.2
----- ----- ----- ----- -----
100.0% 100.0% 100.0% 100.0% 100.0%
===== ===== ===== ===== =====
</TABLE>

RECENT GROWTH

Much of the Company's recent growth has resulted from acquisitions. Since
1993, the Company has acquired four Michigan banks, two branch facilities and
established five real estate mortgage loan production offices. As a result, the
Company's assets have grown to approximately $793.2 million at September 30,
1996, from $403.1 million at December 31, 1992.

In October 1993, the Company acquired American Home Bank ("American") and
Pioneer Bank ("Pioneer"), with assets of approximately $32 million and $35
million, respectively. The purchase price of $2.5 million for American
approximated its then book value, while the purchase price of $4.5 million for
Pioneer represented a premium of approximately 15% to Pioneer's book value. In
March 1994, the Company increased its assets by approximately $37.2 million by
acquiring KSB and its wholly owned subsidiary The Kingston State Bank
("Kingston"). In connection with this acquisition, the Company issued shares of
its Common Stock with a market value of approximately $4.4 million, representing
a premium of roughly 15% to KSB's book value. American, Pioneer and Kingston
have been consolidated to form IBEM. Effective May 31, 1996, the Company
acquired NBC, with assets of approximately $152.0 million, for cash in the
amount of $15.8 million. This represented a premium of approximately 66% to
NBC's book value. North Bank, NBC's wholly-owned subsidiary bank, was
consolidated with Independent Bank on August 12, 1996.

29
<PAGE> 32

THE COMPANY'S APPROACH TO COMMUNITY BANKING

The Company's operating philosophy preserves those elements of traditional
community banking which management believes create a competitive advantage in
the markets in which it operates. Among these are a high level of personal
service and customer recognition, prompt response to customer needs,
convenience, continuity of personnel and management, and commitment to and
participation in the community. Management attributes the Company's success in
preserving its community banking practices in the face of its recent growth to
three primary characteristics; (1) decentralized bank management, (2)
corporate-wide administrative and technical support, and (3) experienced Company
and Bank management.

DECENTRALIZED MANAGEMENT. The Company believes that vesting management and
the boards of the Banks with the authority to make local decisions allows the
Banks to better anticipate customer needs, respond to customer demands, and
identify profitable opportunities within their respective markets. To provide
the flexibility to effectively pursue these opportunities, the Company's
decentralized management structure vests pricing and credit decisions in the
management of the respective Banks. While management of each of the Banks is
granted the authority to make decisions for its local operations, it is also
held accountable for its performance.

CORPORATE ADMINISTRATIVE AND SUPPORT SERVICES. To complement the
decentralized management structure of the Company and establish consistent
service and quality and attain operating efficiencies, the Company's corporate
service departments provide a variety of services to each of the Banks. These
services include data processing, accounting and audit services, purchasing and
risk management, commercial loan credit analysis, servicing and review, consumer
loan servicing, real estate mortgage loan underwriting, servicing and secondary
market operations, asset/liability management and marketing services. The
Company believes that this partnership between the Banks' management and Company
personnel allows the management of each of the Banks to focus on sales and
marketing and at the same time provides the Company with the internal controls
that are consistent with the needs of a decentralized organization. Further,
this combination of decentralized management and centralized services provides
economies of scale that permit the Company to attract and retain talented
managers that possess specific expertise in areas that the Banks could not
achieve on an individual basis.

MANAGEMENT EXPERIENCE AND COMPENSATION. The Company's growth and
profitability is also attributable to management's experience in providing
community banking services. The Banks' four presidents, along with the Company's
two executive officers, have been employed by the Company, on average, for over
10 years. Set forth below is a list of the Company's executive officers and Bank
presidents, their respective ages and financial industry experience.

<TABLE>
<CAPTION>
YEARS OF FINANCIAL
NAME (AGE) POSITION WITH COMPANY INDUSTRY EXPERIENCE
- --------------------------------- ------------------------------------------ -------------------
<S> <C> <C>
Charles C. Van Loan (48)......... President, Chief Executive Officer and
Director 19
William R. Kohls (39)............ Executive Vice President and
Chief Financial Officer 17
Jeffrey A. Bratsburg (53)........ President and Chief Executive Officer --
Independent Bank West Michigan 25
Edward B. Swanson (43)........... President and Chief Executive Officer --
Independent Bank South Michigan 21
Michael M. Magee, Jr. (40)....... President and Chief Executive Officer --
Independent Bank 21
Ronald L. Long (37).............. President and Chief Executive Officer --
Independent Bank East Michigan 15
</TABLE>

The Company's growth has allowed it to recruit and retain experienced
individuals, and the recent acquisitions have added experienced community
bankers to its franchise. The Company's compensation policies and practices are
central to the maintenance of its decentralized management structure, and are
intended to promote and support local Bank autonomy while at the same time
enhancing overall Company performance. As an example, individual bonuses are
currently based on the performance of the Bank the employee works for, as well
as the overall performance of the Company. The Company believes that this

30
<PAGE> 33

combination promotes individual bank performance and at the same time ensures
that results are to the ultimate benefit of the Company's shareholders. In
addition to cash incentive plans, the Company maintains a variety of
equity-based plans to provide incentives for superior performance and to align
the interests of its executive officers and managers with those of the Company's
shareholders. Such "pay for performance" compensation plans include annual cash
performance awards, the Employee Stock Ownership Plan, the Employee Stock Option
Plan and the Incentive Share Grant Plan. As a result of these policies and
practices, every full-time employee, subject to certain employment conditions,
has an equity interest in the Company. Collectively, the Company's directors and
executive officers and Bank presidents own approximately 12.7% of the Company's
Common Stock, and as such have a vested interest in the Company's future success
and growth.

BUSINESS STRATEGY

The Company intends to supplement its internal growth with selective
acquisitions, while at the same time managing its capital resources. One of the
principal challenges confronting the Company, in light of its recent growth, is
the preservation of its decentralized management structure, which represents the
core of its community banking foundation.

INTERNAL GROWTH. Management believes that the stable and diversified
economies of the suburban and rural cities served by the Banks' offices, as well
as nearby communities and metropolitan areas, provide attractive markets for the
Company's traditional commercial banking services. Although the financial
services industry continues to be highly competitive, in view of the limited
competition within many of the Banks' principal markets, the Company's community
banking philosophy emphasizes a high level of service and convenience as the
principal means of competition.

The markets served by the Banks provide attractive opportunities for
maintaining favorable net interest margins; however, the predominantly rural and
suburban nature of these markets presents certain challenges to the Company's
ability to grow. In the face of this challenge, the Banks have utilized various
strategies, based upon the particular attributes of their respective markets, to
provide asset growth and profitably deploy capital. In the absence of meaningful
deposit growth within those markets, the Banks have increasingly relied on
advances from the FHLB to fund the increase in assets. The Company intends to
encourage the Banks to continue to operate autonomously to provide the
flexibility that may be necessary to take advantage of opportunities in their
respective markets.

The Company's corporate service departments develop various expertise to
assist the Banks and Bank management. In addition, the Banks share certain
expertise and experiences with one another. This sharing of expertise and
general coordination among the Company and the Banks is accomplished through a
network of holding company committees. The Company intends to continue to
promote the development of expertise and coordination among the Banks in order
to foster the Banks' growth in their respective markets.

ACQUISITION STRATEGY. The Company will continue to consider opportunities
for expansion through selective acquisitions in markets where management
believes its community banking approach creates a competitive advantage. In
order to capitalize upon its existing banking network, the Company will continue
to focus primarily on acquisitions in contiguous markets; however, the Company
may consider expansion into noncontiguous markets in instances where management
believes that opportunities exist to enhance shareholder value and allow for
effective application of its community banking practices. Management expects
that, given its relative size, the Company can sustain meaningful growth through
acquisitions in markets that are attractive to the Company but may not be of
sufficient size to interest its larger competitors.

CAPITAL MANAGEMENT. The Company intends to continue to focus on managing
its capital to provide an attractive return for its shareholders' investment.
The Company's dividend policies and share repurchase plan have been integral
components of management's efforts to maintain profitable financial leverage
within management's established risk parameters. Cash dividends declared were
equal to 36.5% of earnings for the first nine months of 1996, and were 36.8% and
34.6% of earnings in 1995 and 1994, respectively. Since January 1, 1994, the
Company repurchased approximately 75,900 shares of its Common Stock. The Company
may rely upon these capital management practices, in the absence of profitable
growth opportunities, as part of its goal of achieving an attractive return on
its shareholders' investment.

31
<PAGE> 34

THE BANKS

The following table depicts the Company's and the Banks' loan portfolios as
of September 30, 1996:

<TABLE>
<CAPTION>
CONSOLIDATED % OF TOTAL
---------------------- ----------------------------
AMOUNT % OF TOTAL IB IBWM IBSM IBEM
-------- ---------- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Real Estate
Residential first mortgages................. $263,224 46.6% 15.7% 15.7% 9.0% 6.2%
Residential home equity mortgages........... 31,528 5.6 1.7 2.6 1.0 0.3
Construction and land development........... 46,350 8.2 2.4 3.2 2.0 0.6
Other....................................... 84,428 14.9 6.3 3.4 2.8 2.4
Consumer...................................... 92,137 16.3 9.5 3.0 1.4 2.4
Commercial.................................... 31,534 5.6 3.7 1.3 0.5 0.1
Agricultural.................................. 16,217 2.8 0.2 0.1 0.2 2.3
-------- ----- ---- ---- ---- ----
Total loans.............................. $565,418 100.0% 39.5% 29.3% 16.9% 14.3%
======== ===== ==== ==== ==== ====
</TABLE>

The Banks' activities cover traditional phases of retail and commercial
banking, including checking and savings accounts, commercial and agricultural
lending, direct and indirect consumer financing, mortgage lending and deposit
box services. The Banks do not offer trust services. Most of the Banks' offices
provide full service lobby and drive-in services in the communities which they
serve. Automated teller machines are also provided at most locations.

Principally located in rural and suburban communities, the Banks face
limited competition within certain of their primary markets. In general,
however, the financial services industry is highly competitive. Banks and bank
holding companies compete not only with each other, but with savings and loan
associations, money market mutual funds, credit unions, securities dealers,
providers of insurance and annuity fund products and investment bankers. The
market share information appearing below is derived from the June 30, 1995
deposit balances made available by the federal banking regulatory agencies.

As of September 30, 1996, the Company and the Banks had 407 full-time
employees and 169 part-time employees.

INDEPENDENT BANK

Independent Bank ("IB"), founded in 1864, operates in two geographically
distinct regions. Its south region consists of most of Ionia County and adjacent
townships in Montcalm County. Ionia County, with a population of nearly 60,000,
is located between the Grand Rapids and Lansing metropolitan areas. Within this
region, IB is the only depository institution in several communities. IB's
market share, in communities where its branches are located, exceeds 30% of
total deposits.

IB's north region is comprised of the former branches of North Bank,
acquired as a result of the NBC Acquisition. IB defines its markets in this
region of northeastern Michigan as the counties of Iosco, Alpena and Presque
Isle, along with portions of Ogemaw, Alcona and Montmorency counties. IB's
northeastern branches are located in Hale, Tawas City, Rogers City, Rose City,
Whittemore, Glennie, Hillman and Hubbard Lake, as well as the larger communities
of Alpena and Oscoda. Within seven of the ten communities served by its branches
in this region, IB's market share of deposits exceeds 50%, and it is the only
bank with an office located within four of these communities.

While the regions are geographically distinct, the rural communities served
by IB's branches are demographically similar and rely on an economic base that
includes manufacturers, service and retail businesses, agriculture, mining,
forest products and government. Notwithstanding these similarities, Ionia
County's population and IB's business benefit from the region's proximity to
Grand Rapids and Lansing as well as the six facilities of the Michigan
Department of Corrections that are located in Ionia and Carson City. IB's
northeastern region benefits from a substantial retirement population as well as
vacationers.

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<PAGE> 35

INDEPENDENT BANK WEST MICHIGAN

The main office of Independent Bank West Michigan ("IBWM") is located in
Rockford, a northern suburb of Grand Rapids. IBWM's branches serve the
communities of Howard City, Sand Lake, Cedar Springs, White Cloud, Newaygo,
Sparta and Croton Hardy located in northern Kent County, western Montcalm County
and southern Newaygo County. IBWM is the only financial institution with an
office in two of these communities; within three other markets IBWM's market
share exceeds 55% of total deposits. Additionally, IBWM has established loan
production offices with 21 commissioned real estate mortgage loan originators
that serve Muskegon, Mecosta and Ottawa counties.

IBWM's principal markets contain two distinct demographic groups. As a
suburb of Grand Rapids, Rockford is a fast growing, affluent residential
community while most of the remaining markets are rural. Reflecting the profile
of its markets, IBWM has emphasized consumer banking and, given the rapid growth
of western Michigan, real estate mortgage lending. As a result of IBWM's success
in real estate mortgage lending, the Company has experience in secondary
marketing and servicing that promotes the success of the other Banks.

INDEPENDENT BANK SOUTH MICHIGAN

Independent Bank South Michigan ("IBSM") has its headquarters in Leslie,
located between Lansing and Jackson. IBSM's branches are located in Ingham and
Eaton counties and the northern portion of Jackson County. Within the
communities of Rives Junction, Pleasant Lake, Potterville, Vermontville and
Leslie, IBSM is the only depository institution. Within seven of the nine
communities served by IBSM's branches, its market share exceeds 60% of total
deposits. Principal employers within this market include General Motors
Corporation, the State of Michigan and Michigan State University.

Although historically characterized as an agricultural bank, IBSM has
increased its focus on consumer and real estate mortgage lending and, to a
lesser degree, the non-agricultural commercial lending opportunities within its
markets. Its Okemos-based loan production office serves the greater Lansing area
and further leverages the Company's expertise in real estate mortgage lending.

INDEPENDENT BANK EAST MICHIGAN

The main office of IBEM is located in Caro, centrally located in Tuscola
County in the heart of eastern Michigan's thumb region. In addition to the
communities of Unionville, Kingston, Snover and Reese within Tuscola County,
IBEM's branches serve Clifford, North Branch, Clio and Marlette located in
northern Lapeer, Sanilac and Genesse counties. Within four of these communities,
IBEM is the only depository institution. Notwithstanding the agricultural-based
economy of the thumb region, IBEM's markets benefit from their proximity to the
Detroit metropolitan areas.

The pending acquisition of the FOA Branches, located in the communities of
Bad Axe, Sebewaing, Caseville, Elkton, Kinde, Ubly and Gagetown will add
approximately $122 million of deposits. As a result, IBEM will become the
largest depository institution in Huron County with a market share of
approximately 25% of total deposits.

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<PAGE> 36

LEGAL PROCEEDINGS

The Company and the Banks are parties to various claims, complaints and
other legal actions that have arisen in the ordinary course of business from
time to time. Management believes that the outcome of all pending legal
proceedings, in the aggregate, will not have a material adverse effect on the
Company's or the Banks' business, results of operations or financial condition.

SUPERVISION AND REGULATION

The following is a summary of certain statutes and regulations affecting
the Company and the Banks. This summary is qualified in its entirety by
reference to the particular statutes and regulations. A change in applicable
laws or regulations may have a material effect on the Company, the Banks and the
businesses of the Company and the Banks. See "Risk Factors."

GENERAL

Financial institutions and their holding companies are extensively
regulated under federal and state law. Consequently, the growth and earnings
performance of the Company and the Banks can be affected not only by management
decisions and general and local economic conditions, but also by the statutes
administered by, and the regulations and policies of, various governmental
regulatory authorities. Those authorities include, but are not limited to the
Federal Reserve Board, the FDIC, the Commissioner of the Michigan Financial
Institutions Bureau ("Commissioner"), the Internal Revenue Service, and state
taxing authorities. The effect of such statutes, regulations and policies and
any changes thereto can be significant and cannot be predicted.

Federal and state laws and regulations generally applicable to financial
institutions and their holding companies regulate, among other things, the scope
of business, investments, reserves against deposits, capital levels relative to
operations, lending activities and practices, the nature and amount of
collateral for loans, the establishment of branches, mergers, consolidations and
dividends. The system of supervision and regulation applicable to the Company
and the Banks establishes a comprehensive framework for their respective
operations and is intended primarily for the protection of the FDIC's deposit
insurance funds, the depositors of the Banks, and the public, rather than
shareholders of the Company.

Federal law and regulations, including provisions added by the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") and regulations
promulgated thereunder, establish supervisory standards applicable to the
lending activities of the Banks, including internal controls, credit
underwriting, loan documentation, and loan-to-value ratios for loans secured by
real property.

THE COMPANY

GENERAL. The Company is a bank holding company and, as such, is registered
with, and subject to regulation by, the Federal Reserve Board under the Bank
Holding Company Act, as amended (the "BHCA"). Under the BHCA, the Company is
subject to periodic examination by the Federal Reserve Board, and is required to
file periodic reports of its operations and such additional information as the
Federal Reserve Board may require.

In accordance with Federal Reserve Board policy, the Company is expected to
act as a source of financial strength to the Banks and to commit resources to
support the Banks in circumstances where the Company might not do so absent such
policy. In addition, in certain circumstances a Michigan state bank having
impaired capital may be required by the Commissioner either to restore the
bank's capital by a special assessment upon its shareholders, or to initiate the
liquidation of the bank.

Any capital loans by a bank holding company to a subsidiary bank are
subordinate in right of payment to deposits and to certain other indebtedness of
such subsidiary bank. In the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a subsidiary bank will be assumed by the bankruptcy
trustee and entitled to a priority of payment. This priority would apply to
guarantees of capital plans under FDICIA.

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<PAGE> 37

INVESTMENTS AND ACTIVITIES. Under the BHCA, bank holding companies are
prohibited, with certain limited exceptions, from engaging in activities other
than those of banking or of managing or controlling banks and from acquiring or
retaining direct or indirect ownership or control of voting shares or assets of
any company which is not a bank or bank holding company, other than subsidiary
companies furnishing services to or performing services for its subsidiaries,
and other subsidiaries engaged in activities which, by the Federal Reserve
Board's determination, is closely related to banking or managing or controlling
banks. Since September 29, 1995, the BHCA has permitted the Federal Reserve
Board under specified circumstances to approve the acquisition by a bank holding
company located in one state, of a bank or bank holding company located in
another state, without regard to any prohibition contained in state law. See
"Recent Regulatory Developments."

In general, any direct or indirect acquisition by the Company of any voting
shares of any bank which would result in the Company's direct or indirect
ownership or control of more than 5% of any class of voting shares of such bank,
and any merger or consolidation of the Company with another bank holding
company, will require the prior written approval of the Federal Reserve Board
under the BHCA. In acting on such applications, the Federal Reserve Board must
consider various statutory factors, including among others, the effect of the
proposed transaction on competition in relevant geographic and product markets,
and each party's financial condition, managerial resources, and record of
performance under the Community Reinvestment Act.

In addition and subject to certain exceptions, the change in the Bank
Control Act ("Control Act") and regulations promulgated thereunder by the
Federal Reserve Board, require any person acting directly or indirectly, or
through or in concert with one or more persons, to give the Federal Reserve
Board 60 days' written notice before acquiring control of a bank holding
company. Transactions which are presumed to constitute the acquisition of
control include the acquisition of any voting securities of a bank holding
company having securities registered under Section 12 of the Securities Exchange
Act of 1934, as amended, if, after the transaction, the acquiring person (or
persons acting in concert) owns, controls or holds with power to vote 25% or
more of any class of voting securities of the institution. The acquisition may
not be consummated subsequent to such notice if the Federal Reserve Board issues
a notice within 60 days, or within certain extensions of such period,
disapproving the same.

The merger or consolidation of an existing bank subsidiary of the Company
with another bank, or the acquisition by such a subsidiary of the assets of
another bank, or the assumption of the liabilities by such a subsidiary to pay
any deposits in another bank, requires the prior written approval of the
responsible Federal depository institution regulatory agency under the Bank
Merger Act, based upon a consideration of statutory factors similar to those
outlined above with respect to the BHCA. In addition, in certain such cases an
application to, and the prior approval of, the Federal Reserve Board under the
BHCA and/or the Commissioner under Michigan banking laws, may be required.

With certain limited exceptions, the BHCA prohibits bank holding companies
from acquiring direct or indirect ownership or control of voting shares or
assets of any company other than a bank, unless the company involved is engaged
solely in one or more activities which the Federal Reserve Board has determined
to be closely related to banking or managing or controlling banks. In making
this determination, the Federal Reserve Board considers various factors,
including among others the financial and managerial resources of the notifying
bank holding company, and the relative public benefits and adverse effects which
may be expected to result from the performance of the activity by an affiliate
of such company. The Federal Reserve Board may apply different standards to
activities proposed to be commenced de novo and activities commenced by
acquisition, in whole or in part, of a going concern.

The recent enactment of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 ("EGRPRA") streamlines the nonbanking activities
application process for well capitalized and well managed bank holding
companies. See "Recent Regulatory Developments." Under EGRPRA, qualified bank
holding companies may commence a regulatory approved nonbanking activity without
prior notice to the Federal Reserve Board; written notice is merely required
within ten days after commencing the activity. Also, under EGRPRA, the prior
notice period is reduced to 12 days in the event of any nonbanking acquisition
or

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<PAGE> 38

share purchase, assuming the size of the acquisition does not exceed 10% of
risk-weighted assets of the acquiring bank holding company and the consideration
does not exceed 15% in Tier 1 capital. This prior notice requirement also
applies to commencing a nonbanking activity de novo which has been approved by
the Federal Reserve Board only.

CAPITAL REQUIREMENTS. The Federal Reserve Board uses capital adequacy
guidelines in its examination and regulation of bank holding companies. If
capital falls below minimum guidelines, a bank holding company may, among other
things, be denied approval to acquire or establish additional banks or non-bank
businesses.

The Federal Reserve Board's capital guidelines establish the following
minimum regulatory capital requirements for bank holding companies: (i) a
capital leverage requirement expressed as a percentage of total assets, (ii) a
risk-based requirement expressed as a percentage of total risk-weighted assets,
and (iii) a Tier 1 leverage requirement expressed as a percentage of total
assets. The capital leverage requirement consists of a minimum ratio of total
capital to total assets of 6%, with an expressed expectation that banking
organizations generally should operate above such minimum level. The risk-based
requirement consists of a minimum ratio of total capital to total risk-weighted
assets of 8%, of which at least one-half must be Tier 1 capital (which consists
principally of shareholders' equity). The Tier 1 leverage requirement consists
of a minimum ratio of Tier 1 capital to total assets, less goodwill ("Tier 1
capital leverage ratio") of 3% for the most highly rated companies, with minimum
requirements of 4% to 5% for all others.

The risk-based and leverage standards presently used by the Federal Reserve
Board are minimum requirements, and higher capital levels will be required if
warranted by the particular circumstances or risk profiles of individual banking
organizations. Further, any banking organization experiencing or anticipating
significant growth would be expected to maintain capital ratios, including
tangible capital positions (i.e., Tier 1 capital less all intangible assets),
well above the minimum levels. The Federal Reserve Board has not advised the
Company of any specific minimum Tier 1 capital leverage ratio applicable to it.

FDICIA requires the federal bank regulatory agencies biennially to review
risk-based capital standards to ensure that they adequately address interest
rate risk, concentration of credit risk and risks from non-traditional
activities and, since adoption of the Riegle Community Development and
Regulatory Improvement Act of 1994 (the "Riegle Act"), to do so taking into
account the size and activities of depository institutions and the avoidance of
undue reporting burdens. See "Recent Regulatory Developments." In 1995, the
federal bank regulatory agencies adopted regulations requiring as part of the
assessment of an institution's capital adequacy the consideration of: (i)
identified concentrations of credit risks, (ii) the exposure of the institution
to a decline in the value of its capital due to changes in interest rates, and
(iii) the application of revised conversion factors and netting rules on the
institution's potential future exposure from derivative transactions. In
addition, the agencies proposed: (i) additional required data submissions on
periodic Reports of Condition and Income ("Call Reports") regarding interest
rate exposure, to furnish a basis for future regulations imposing explicit
minimum capital charges for interest rate risk, and (ii) incorporation in the
capital adequacy regulations of a measure for market risk in, among other
things, the trading of debt instruments.

DIVIDENDS. The Company is a corporation separate and distinct from the
Banks. Most of the Company's revenues are received by it in the form of
dividends paid by the Banks. The Banks are subject to statutory restrictions on
their ability to pay dividends to the Company. See "The Banks -- Dividends." The
Federal Reserve Board has issued a policy statement on the payment of cash
dividends by bank holding companies. In the policy statement, the Federal
Reserve Board expressed its view that a bank holding company experiencing
earnings weaknesses should not pay cash dividends exceeding its net income or
which could only be funded in ways that weakened the bank holding company's
financial health, such as by borrowing. Additionally, the Federal Reserve Board
possesses enforcement powers over bank holding companies and their non-bank
subsidiaries to prevent or remedy actions that represent unsafe or unsound
practices or violations of applicable statutes and regulations. Among these
powers is the ability to proscribe the payment of dividends by banks and bank
holding companies. Similar enforcement powers over the Banks are possessed by
the FDIC. The "prompt corrective action" provisions of FDICIA impose further
restrictions on the payment of dividends by insured banks which fail to meet
specified capital levels and, in some cases, impose similar restrictions on
their parent bank holding companies.

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<PAGE> 39

In addition to the restrictions on dividends imposed by the Federal Reserve
Board, the Michigan Business Corporation Act provides that dividends may be
legally declared or paid only if after the distribution a corporation, such as
the Company, can pay its debts as they come due in the usual course of business
and its total assets equal or exceed the sum of its liabilities plus the amount
that would be needed to satisfy the preferential rights upon dissolution of any
holders of preferred stock whose preferential rights are superior to those
receiving the distribution.

THE BANKS

GENERAL. The Banks are Michigan banking corporations and their deposit
accounts are principally insured by the BIF of the FDIC. As BIF-insured Michigan
chartered banks, the Banks are subject to the examination, supervision,
reporting and enforcement requirements of the Commissioner, as the chartering
authority for Michigan banks, and the FDIC, as administrator of the BIF. These
agencies and federal and state law extensively regulate various aspects of the
banking business including, among other things, permissible types and amounts of
loans, investments and other activities, capital adequacy, branching, interest
rates on loans and on deposits, the maintenance of noninterest-bearing reserves
on deposit accounts, and the safety and soundness of banking practices.

DEPOSIT INSURANCE. As FDIC-insured institutions, the Banks are required to
pay deposit insurance premium assessments to the FDIC. Pursuant to FDICIA, the
FDIC adopted a risk-based assessment system under which all insured depository
institutions are placed into one of nine categories and assessed insurance
premiums, based upon their level of capital and supervisory evaluation.
Institutions classified as well-capitalized (as defined by the FDIC) and
considered healthy pay the lowest premium while institutions that are less than
adequately capitalized (as defined by the FDIC) and considered of substantial
supervisory concern pay the highest premium. Risk classification of all insured
institutions is made by the FDIC for each semi-annual assessment period.

FDICIA required the FDIC to establish assessment rates at levels which
would restore the BIF to a mandated reserve ratio of 1.25% of insured deposits
over a period not to exceed 15 years. In 1995, the FDIC determined that the BIF
had reached the required ratio. Accordingly, the FDIC has established the
schedule of BIF insurance assessments for the first semi-annual assessment
period of 1996, ranging from 0% of deposits for institutions in the highest
category to .27% of deposits for institutions in the lowest category. For the
first nine months of 1996, the Banks paid $32,000 in BIF insurance assessments.

At September 30, 1996, the Banks held less than $11 million of SAIF insured
deposits, and paid an average rate premium of .23% on such deposits during the
first nine months of 1996. The deposit liabilities to be assumed in connection
with the acquisition of the FOA Branches are all insured by SAIF. Effective
October 1, 1996, the FDIC was authorized to impose a special assessment on
certain SAIF-assessable deposits. Because IBEM held no SAIF-assessable deposits
as of March 31, 1995, IBEM will be exempt from the special assessment.

The FDIC may terminate the deposit insurance of any insured depository
institution if the FDIC determines, after a hearing, that the institution or its
directors have engaged or are engaging in unsafe or unsound practices, or have
violated any applicable law, regulation, order, or any condition imposed in
writing by, or written agreement with, the FDIC, or if the institution is in an
unsafe or unsound condition to continue operations. The FDIC may also suspend
deposit insurance temporarily during the hearing process for a permanent
termination of insurance if the institution has no tangible capital.

CAPITAL REQUIREMENTS. Consistent with the Federal Reserve Board's
guidelines for bank holding companies, the FDIC has established the following
minimum capital standards for state-chartered, FDIC-insured non-member banks,
such as the Banks: a leverage requirement consisting of a minimum ratio of Tier
1 capital to total assets of 3% for the most highly-rated banks with minimum
requirements of 4% to 5% for all others and a risk-based capital requirement
consisting of a minimum ratio of total capital to total risk-weighted assets

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<PAGE> 40

of 8%, at least one-half of which must be Tier 1 capital (which consists
principally of shareholders' equity). These capital requirements are minimum
requirements. Higher capital levels will be required if warranted by the
particular circumstances or risk profiles of individual institutions.

FDICIA establishes five capital categories, and the federal depository
institution regulators, as directed by FDICIA, have adopted, subject to certain
exceptions, the following minimum requirements for each of such categories:

<TABLE>
<CAPTION>
TOTAL TIER 1
RISK-BASED RISK-BASED
CAPITAL RATIO CAPITAL RATIO LEVERAGE RATIO
-------------- -------------- -----------------------
<S> <C> <C> <C>
Well capitalized............................ 10% or above 6% or above 5% or above
Adequately capitalized...................... 8% or above 4% or above 4% or above
Undercapitalized............................ Less than 8% Less than 4% Less than 4%
Significantly undercapitalized.............. Less than 6% Less than 3% Less than 3%
Critically undercapitalized................. -- -- A ratio of tangible
equity to total assets
of 2% or less
</TABLE>

At September 30, 1996, each of the Banks' ratios exceeded minimum
requirements for the well-capitalized category.

Among other things, FDICIA requires the federal depository institution
regulators to take prompt corrective action in respect of depository
institutions that do not meet minimum capital requirements. The scope and degree
of regulatory intervention is linked to the capital category to which a
depository institution is assigned.

Depending upon the capital category to which an institution is assigned,
the regulators' corrective powers include: requiring the submission of a capital
restoration plan; placing limits on asset growth and restrictions on activities;
requiring the institution to issue additional capital stock (including
additional voting stock) or to be acquired; restricting transactions with
affiliates; restricting the interest rate the institution may pay on deposits;
ordering a new election of directors of the institution; requiring that senior
executive officers or directors be dismissed; prohibiting the institution from
accepting deposits from correspondent banks; requiring the institution to divest
certain subsidiaries; prohibiting the payment of principal or interest on
subordinated debt; and ultimately, appointing a receiver for the institution.

In general, a depository institution may be reclassified to a lower
category than is indicated by its capital position if the appropriate federal
depository institution regulatory agency determines the institution to be
otherwise in an unsafe or unsound condition or to be engaged in an unsafe or
unsound practice. Such a practice could include a failure by the institution,
following receipt of a less-than-satisfactory rating on its most recent
examination report, to correct the deficiency.

DIVIDENDS. Under Michigan law, the Banks are restricted as to the maximum
amount of dividends they may pay on their common stock. A Michigan state bank
may not declare or pay a dividend unless the bank will have a surplus amounting
to at least 20% of its capital after the payment of the dividend. A Michigan
state bank may, with the approval of the Commissioner, by vote of shareholders
owning 2/3 of the stock eligible to vote, increase its capital stock by a
declaration of a stock dividend, provided that after the increase the bank's
surplus equals at least 20% of its capital stock, as increased. The Banks may
not declare or pay any dividend until the cumulative dividends on preferred
stock (should any such stock be issued and outstanding) have been paid in full.
The Banks have no present plans to issue preferred stock other than the
Preferred Stock.

FDICIA generally prohibits a depository institution from making any capital
distribution (including payment of a dividend) or paying any management fee to
its holding company if the depository institution would thereafter be
undercapitalized. The FDIC may also prevent an insured bank from paying
dividends if the bank is in default of payment of any assessment due to the
FDIC. In addition, payment of dividends by a

38
<PAGE> 41

bank may be prevented by the applicable federal regulatory authority if such
payment is determined, by reason of the financial condition of such bank, to be
an unsafe and unsound banking practice. The Federal Reserve Board has issued a
policy statement providing that bank holding companies and insured banks should
generally only pay dividends out of current operating earnings.

INSIDER TRANSACTIONS. The Banks are subject to certain restrictions imposed
by the Federal Reserve Act on any extensions of credit to the Company or its
subsidiaries, on investments in the stock or other securities of the Company or
its subsidiaries and the acceptance of the stock or other securities of the
Company or its subsidiaries as collateral for loans. The "covered transactions"
that an insured bank and its subsidiaries are permitted to engage in with their
nonbank affiliates are limited to the following amounts: (i) in the case of any
one such affiliate, the aggregate amount of "covered transactions" of the
insured bank and its subsidiaries cannot exceed 10% of the capital stock and
surplus of the insured bank; and (ii) in the case of all affiliates, the
aggregate amount of all "covered transactions" of the insured bank and its
subsidiaries cannot exceed 20% of the capital stock and surplus of the insured
bank. "Covered transactions" are defined by statute to include a loan or
extension of credit to the affiliate, a purchase of securities issued by an
affiliate, a purchase of assets from the affiliate (unless otherwise exempted by
the Federal Reserve Board), the acceptance of securities issued by the affiliate
as collateral for a loan, and the issuance of a guaranty, acceptance, or letter
of credit for the benefit of an affiliate. Covered transactions must also be
collateralized. Certain limitations and reporting requirements are also placed
on extensions of credit by the Banks to their directors and officers, to
directors and officers of the Company and its subsidiaries, to principal
shareholders of the Company, and to "related interests" of such directors,
officers and principal shareholders. In addition, such legislation and
regulations may affect the terms upon which any person becoming a director or
officer of the Company or one of its subsidiaries or a principal shareholder of
the Company may obtain credit from banks with which any of the Banks maintains a
correspondent relationship.

SAFETY AND SOUNDNESS STANDARDS. On July 10, 1995, the FDIC, the Office of
Thrift Supervision, the Federal Reserve Board and the Office of the Comptroller
of the Currency published final guidelines implementing the FDICIA requirement
that the federal banking agencies establish operational and managerial standards
to promote the safety and soundness of federally insured depository
institutions. The guidelines, which took effect on August 9, 1995, establish
standards for internal controls, information systems, internal audit systems,
loan documentation, credit underwriting, interest rate exposure, asset growth,
and compensation, fees and benefits. In general, the guidelines prescribe the
goals to be achieved in each area, and each institution will be responsible for
establishing its own procedures to achieve those goals. If an institution fails
to comply with any of the standards set forth in the guidelines, the
institution's primary federal regulator may require the institution to submit a
plan for achieving and maintaining compliance. The preamble to the guidelines
states that the agencies expect to require a compliance plan from an institution
whose failure to meet one or more of the standards is of such severity that it
could threaten the safe and sound operation of the institution. Failure to
submit an acceptable compliance plan, or failure to adhere to a compliance plan
that has been accepted by the appropriate regulator, would constitute grounds
for further enforcement action. The federal banking agencies have also published
for comment proposed asset quality and earnings standards which, if adopted,
would be added to the safety and soundness guidelines. This proposal, like the
final guidelines, would make each depository institution responsible for
establishing its own procedures to meet such goals.

STATE BANK ACTIVITIES. Under FDICIA, as implemented by final regulations
adopted by the FDIC, FDIC-insured state banks are prohibited, subject to certain
exceptions, from making or retaining equity investments of a type, or in an
amount, that are not permissible for a national bank. FDICIA, as implemented by
FDIC regulations, also prohibits FDIC-insured state banks and their
subsidiaries, subject to certain exceptions, from engaging as a principal in any
activity that is not permitted for a national bank or its subsidiary,
respectively, unless the bank meets, and continues to meet, its minimum
regulatory capital requirements and the FDIC determines the activity would not
pose a significant risk to the deposit insurance fund of which the bank is a
member. Impermissible investments and activities must be divested or
discontinued within certain time frames set by the FDIC in accordance with
FDICIA.

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<PAGE> 42

CONSUMER BANKING. The Banks' business includes making a variety of types of
loans to individuals. In making these loans, the Banks are subject to State
usury and regulatory laws and to various Federal statutes, such as the Equal
Credit Opportunity Act, Fair Credit Reporting Act, Truth in Lending Act, Real
Estate Settlement Procedures Act, and Home Mortgage Disclosure Act, and the
regulations promulgated thereunder, which (x) prohibit discrimination based on
race, color, religion, national origin, sex, marital status, age (except in
limited circumstances), receipt of income from public assistance programs, or
good faith exercise of any rights under the Consumer Credit Protection Act, (y)
specify disclosures to be made to borrowers regarding credit and settlement
costs, and (z) regulate the mortgage loan servicing activities of the Bank,
including the maintenance and operation of escrow accounts and the transfer of
mortgage loan servicing. The Riegle Act imposed new escrow requirements on
mortgage lenders and servicers under the National Flood Insurance Program. See
"Recent Regulatory Developments." In receiving deposits, the Banks are subject
to extensive regulation under state and federal law and regulations, including
the Truth in Savings Act, the Expedited Funds Availability Act, the Bank Secrecy
Act, the Electronic Funds Transfer Act, and the Federal Deposit Insurance Act.
Violation of these laws could result in the imposition of significant damages
and fines upon the Banks and their respective directors and officers.

RECENT REGULATORY DEVELOPMENTS

In 1994, the Congress enacted two major pieces of banking legislation, the
Riegle Act and the Riegle-Neal Interstate Banking and Branching Efficiency Act
of 1994 (the "Riegle-Neal Act"). The Riegle Act addressed such varied issues as
the promotion of economic revitalization of defined urban and rural "qualified
distressed communities" through special purpose "Community Development Financial
Institutions," the expansion of consumer protection with respect to certain
loans secured by a consumer's home and reverse mortgages, and reductions in
compliance burdens regarding Currency Transaction Reports, reform of the
National Flood Insurance Program, the promotion of a secondary market for small
business loans and leases, and mandating specific changes to reduce regulatory
impositions on depository institutions and holding companies.

The Riegle-Neal Act substantially changed the geographic constraints
applicable to the banking industry. Effective September 29, 1995, the
Riegle-Neal Act allows bank holding companies to acquire banks located in any
state in the United States without regard to geographic restrictions or
reciprocity requirements imposed by state law, but subject to certain
conditions, including limitations on the aggregate amount of deposits that may
be held by the acquiring holding company and all of its insured depository
institution affiliates. Effective June 1, 1997 (or earlier if expressly
authorized by applicable state law), the Riegle-Neal Act allows banks to
establish interstate branch networks through acquisitions of other banks,
subject to certain conditions that include limitations on the aggregate amount
of deposits that may be held by the surviving bank and all of its insured
depository institution affiliates. The establishment of de novo interstate
branches or the acquisition of individual branches of a bank in another state
(rather than the acquisition of an out-of-state bank in its entirety) is allowed
by the Riegle-Neal Act only if specifically authorized by state law. The
legislation allows individual states to "opt-out" of certain provisions of the
Riegle-Neal Act by enacting appropriate legislation prior to June 1, 1997.

In November, 1995, Michigan exercised its right to opt-in early to the
Riegle-Neal Act, and permitted non-U.S. banks to establish branch offices in
Michigan. Effective November 29, 1995, the Michigan Banking Code was amended to
permit, in appropriate circumstances and with the approval of the Commissioner,
(i) the acquisition of Michigan-chartered banks by FDIC-insured banks, savings
banks, or savings and loan associations located in other states, (ii) the sale
by a Michigan-chartered bank of one or more of its branches (not comprising all
or substantially all of its assets) to an FDIC insured bank, savings bank or
savings and loan association located in a state in which a Michigan-chartered
bank could purchase one or more branches of the purchasing entity, (iii) the
acquisition by a Michigan-chartered bank of an FDIC-insured bank, savings bank
or savings and loan association located in another state, (iv) the acquisition
by a Michigan-chartered bank of one or more branches (not comprising all or
substantially all of the assets) of an FDIC-insured bank, savings bank or
savings and loan association located in another state, (v) the consolidation of
one or more Michigan-chartered banks and FDIC-insured banks, savings banks or
savings and loan associations located in

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other states having laws permitting such consolidation, with the resulting
organization chartered either by Michigan or one of such other states, (vi) the
establishment by Michigan-chartered banks of branches located in other states,
the District of Columbia, or U.S. territories or protectorates, and (vii) the
establishment by foreign banks of branches located in Michigan. The amending
legislation also expanded the regulatory authority of the Commissioner and made
certain other changes.

The Michigan Legislature adopted, effective March 28, 1996, the Credit
Reform Act. This statute, together with amendments to other related laws,
permits regulated lenders, indirectly including Michigan-chartered banks, to
charge and collect higher rates of interest and increased fees on certain types
of loans to individuals and businesses. The laws prohibit "excessive fees and
charges," and authorize governmental authorities and borrowers to bring actions
for injunctive relief and statutory and actual damages for violations by
lenders. The statutes specifically authorize class actions, and also civil money
penalties for knowing and willful, or persistent violations.

FDIC regulations which became effective April 1, 1996, impose limitations
(and in certain cases, prohibitions) on (1) certain "golden parachute" severance
payments by troubled depository institutions and their affiliated holding
companies to institution-affiliated parties (primarily directors, officers,
employees, or principal shareholders of the institution), and (ii) certain
indemnification payments by a depository institution or its affiliated holding
company, regardless of financial condition, to institution-affiliated parties.
The FDIC regulations impose limitations on indemnification payments which could
restrict, in certain circumstances, payments by the Company or the Banks to
their respective directors or officers otherwise permitted under the Michigan
Business Corporation Act ("MBCA") or the Michigan Banking Code, respectively.

In October 1996, Congress enacted EGRPRA, which provides for the
recapitalization of SAIF and includes approximately 40 regulatory release
initiatives. Among other matters, this legislation provides for expedited
application procedures for nonbanking activities by well capitalized and well
managed bank holding companies, provides reforms to the Fair Credit Reporting
Act, and provides a variety of other regulatory relief to the banking industry.

DESCRIPTION OF DEPOSITARY SHARES

The following description of certain provisions of the Deposit Agreement
(as defined below) and of the Depositary Shares and Depositary Receipts does not
purport to be complete and is subject to and qualified in its entirety by
reference to the Deposit Agreement and Depositary Receipts relating to the
Preferred Stock filed with the Commission as exhibits to the Registration
Statement. The description of the terms and features of the Preferred Stock is
set forth below under "Description of Capital Stock -- Preferred Stock."

GENERAL

Each Depositary Share represents a one-quarter (1/4) interest in a share of
Preferred Stock. The shares of the Preferred Stock underlying the Depositary
Shares will be deposited under a separate Deposit Agreement (the "Deposit
Agreement") between the Company and State Street Bank & Trust Company (the
"Depositary"). Subject to the terms of the Deposit Agreement, each owner of a
Depositary Share will be entitled, in proportion to the applicable fractional
interest in a share of Preferred Stock underlying such Depositary Share, to all
the rights and preferences of the Preferred Stock underlying such Depositary
Share (including dividend, voting, redemption, conversion, and liquidation
rights).

Pending the preparation of definitive engraved Depositary Receipts, the
Depositary may, upon the written order of the Company, issue temporary
Depositary Receipts substantially identical to (and entitling the holders
thereof to all the rights pertaining to) the definitive Depositary Receipts but
not in definitive form. Definitive Depositary Receipts will be prepared
thereafter without unreasonable delay, and temporary Depositary Receipts will be
exchangeable for definitive Depositary Receipts at the Company's expense.

Upon surrender of the Depositary Receipts at the principal office of the
Depositary (unless the related Depositary Shares have previously been called for
redemption), the owner of the Depositary Shares evidenced thereby will be
entitled to delivery at such office, to or upon his order, of the number of
whole shares of

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<PAGE> 44

Preferred Stock and any money or other property represented by such Depositary
Shares. Partial shares of Preferred Stock will not be issued. If the Depositary
Receipts delivered by the holder evidence a number of Depositary Shares in
excess of the number of Depositary Shares representing the number of whole
shares of Preferred Stock to be withdrawn, the Depositary will deliver to such
holder at the same time a new Depositary Receipt evidencing such excess number
of Depositary Shares. Holders of shares of Preferred Stock thus withdrawn will
not thereafter be entitled to deposit such shares under the Deposit Agreement or
to receipt of Depositary Shares therefor. The Company does not expect that there
will be any public trading market for the Preferred Stock except as represented
by the Depositary Shares. Furthermore, as previously stated, there can be no
assurance that an active public market will develop or be maintained for the
Depositary Shares. See "Risk Factors -- Lack of Market for the Depositary
Shares."

DIVIDENDS AND OTHER DISTRIBUTIONS

The Depositary will distribute all cash dividends or other cash
distributions received in respect of the Preferred Stock to the record holders
of Depositary Shares in proportion to the numbers of such Depositary Shares
owned by such holders on the relevant record date. The Depositary shall
distribute only such amount, however, as can be distributed without attributing
to any holder of Depositary Shares a fraction of one cent, and any balance not
so distributed shall be added to and treated as part of the next sum received by
the Depositary for distribution to record holders of Depositary Shares.

In the event of a distribution other than in cash, the Depositary will
distribute property received by it to the record holders of Depositary Shares
entitled thereto, unless the Depositary determines that it is not feasible to
make such distribution, in which case the Depositary may, with the approval of
the Company, sell such property and distribute the net proceeds from such sale
to such holders.

The Deposit Agreement also contains provisions relating to the manner in
which any subscription or similar rights offered by the Company to holders of
the Preferred Stock shall be made available to holders of Depositary Shares.

CONVERSION

A holder of Depositary Receipts may participate in the conversion of the
Preferred Stock as discussed below under "Description of Capital Stock --
Preferred Stock--Conversion Rights." If the Depositary Shares represented by a
Depositary Receipt are to be converted in part only, a new Depositary Receipt or
Depositary Receipts will be issued by the Depositary for the Depositary Shares
not to be converted. No fractional shares of Common Stock will be issued upon
conversion, and if such conversion would result in a fractional share being
issued, an amount will be paid in cash by the Company equal to the value of the
fractional interest based upon the closing price of the Common Stock on the date
of conversion, or if such date is not a trading date, on the next succeeding
trading date.

REDEMPTION OF DEPOSITARY SHARES

At any time on or after , 2001, and subject to the prior approval
of the Federal Reserve Board, the Company may redeem the Preferred Stock for
$100 per share plus accrued and unpaid dividends through the effective date of
redemption. If the Preferred Stock is redeemed, the Depositary Shares will be
redeemed from the proceeds received by the Depositary resulting from the
redemption, in whole or in part, of the Preferred Stock held by the Depositary.
The Depositary shall mail notice of redemption not less than 30 and not more
than 60 days prior to the date fixed for redemption to the record holders of the
Depositary Shares to be so redeemed at their respective addresses appearing in
the Depositary's books. The redemption price per Depositary Share will be equal
to the applicable fraction of the redemption price per share payable with
respect to the Preferred Stock. Whenever the Company redeems shares of Preferred
Stock held by the Depositary, the Depositary will redeem as of the same
redemption date the number of Depositary Shares relating to shares of Preferred
Stock so redeemed. If less than all the Depositary Shares are to be redeemed,
the Depositary Shares to be redeemed will be selected pro rata as nearly as
practicable or by lot, or by such other method determined to be fair and
appropriate by the Company.

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<PAGE> 45

After the date fixed for redemption, the Depositary Shares so called for
redemption will no longer be deemed to be outstanding and all rights of the
holders of the Depositary Shares will cease, except the right to receive the
monies payable upon such redemption and any money or other property to which the
holders of such Depositary Shares were entitled upon such redemption upon
surrender to the Depositary of the Depositary Receipts evidencing such
Depositary Shares.

VOTING THE PREFERRED STOCK

In general, holders of the Depositary Shares or the Preferred Stock will
not be entitled to voting rights. See "Description of Capital Stock -- Preferred
Stock -- Voting." Upon receipt of notice of any meeting at which the holders of
the Preferred Stock are entitled to vote as discussed below under "Description
of Capital Stock -- Preferred Stock -- Voting," the Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Shares relating to such Preferred Stock. Each record holder of such
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Stock) will be entitled to instruct the Depositary as to
the exercise of the voting rights pertaining to the number of shares of
Preferred Stock underlying such holder's Depositary Shares. The Depositary will
endeavor, insofar as practicable, to vote the number of shares of Preferred
Stock underlying such Depositary Shares in accordance with such instructions,
and the Company will agree to take all action which may be deemed necessary by
the Depositary in order to enable the Depositary to do so. The Depositary will
abstain from voting shares of Preferred Stock to the extent it does not receive
specific instructions from the holders of Depositary Shares relating to such
Preferred Stock.

AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT

The form of Depositary Receipt evidencing the Depositary Shares and any
provision of the Deposit Agreement may at any time be amended by agreement
between the Company and the Depositary. However, any amendment which materially
and adversely alters the rights of the existing holders of Depositary Shares
will not be effective unless such amendment has been approved by the record
holders of at least 66 2/3% of the Depositary Shares then outstanding. The
Deposit Agreement may be terminated by the Company or the Depositary if, among
other reasons, (i) all outstanding Depositary Shares have been redeemed or if
applicable, converted into Common Stock, or (ii) there has been a final
distribution in respect of the Preferred Stock in connection with any
liquidation, dissolution or winding up of the Company and such distribution has
been distributed to the holders of the related Depositary Shares.

CHANGES OF DEPOSITARY

The Company will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. The Company will pay
charges of the Depositary in connection with the initial deposit of the
Preferred Stock and any redemption of the Preferred Stock. Holders of Depositary
Shares will pay other transfer and other taxes and governmental charges and such
other charges as are expressly provided in the Deposit Agreement to be for their
accounts.

MISCELLANEOUS

The transfer agent, registrar, dividend disbursing agent, and redemption
agent for the Depositary Shares is State Street Bank & Trust Company. The
Depositary will forward to the holders of Depositary Shares all reports and
communications from the Company which are delivered to the Depositary and which
the Company is required to furnish to the holders of the Preferred Stock.

Neither the Depositary nor the Company will be liable if it is prevented or
delayed by law or any circumstance beyond its control in performing its
obligations under the Deposit Agreement. The obligations of the Company and the
Depositary under the Deposit Agreement will be limited to performance in good
faith of their duties thereunder and they will not be obligated to prosecute or
defend any legal proceeding in respect of any Depositary Shares or Preferred
Stock unless satisfactory indemnity is furnished. They may rely upon

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<PAGE> 46

written advice of counsel or accountants, holders of Depositary Shares or other
persons believed to be competent and on documents believed to be genuine.

RESIGNATION AND REMOVAL OF DEPOSITARY

The Depositary may resign at any time by delivering to the Company notice
of its election to do so, and the Company may at any time remove the Depositary,
any such resignation or removal to take effect upon the appointment of a
successor Depositary and its acceptance of such appointment. Such successor
Depositary must be appointed within 60 days after delivery of the notice of
resignation or removal and must be a bank or trust company having its principal
office in the United States and having a combined capital and surplus of at
least $50,000,000.

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 200,000 shares of
preferred stock, none of which are outstanding, and 14,000,000 shares of Common
Stock, 2,861,399 of which were outstanding as of September 30, 1996. The
following is a description of the Company's capital stock.

COMMON STOCK

Subject to the rights, if any, of holders of any of the Company's preferred
stock then outstanding, all voting rights are vested in holders of shares of
Common Stock. Each share of Common Stock entitles the holder thereof to one
vote. Holders of shares of Common Stock are not entitled to cumulative voting
rights and have no preemptive right to subscribe for additional securities
issuable by the Company.

Subject to any prior rights of holders of preferred stock then outstanding,
holders of the Company's Common Stock are entitled to receive dividends as the
Board of Directors may from time to time declare out of funds legally available
for that purpose. In the event of the liquidation, dissolution or winding up of
the Company, holders of Common Stock are entitled to share pro rata in the
assets available for distribution to holders of Common Stock. The outstanding
shares of Common Stock are fully paid and non-assessable. The Company's transfer
agent is State Street Bank & Trust Company.

PREFERRED STOCK

The following description of the terms of the Preferred Stock sets forth
certain general terms and provisions of the Preferred Stock. The following
description of certain provisions of the Preferred Stock does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Certificate of Designation relating to the Preferred Stock, a copy of which has
been filed as an exhibit to the Registration Statement.

DIVIDENDS. Holders of the Preferred Stock will be entitled to receive, when
and as declared by the Board of Directors of the Company, out of assets of the
Company legally available for payment, cash dividends at the rate of % of
the liquidation preference per annum (equivalent to $ per annum per
Depositary Share). Dividends will be calculated on the basis of a 360 day year
consisting of twelve 30 day months and will be payable quarterly on the last
business day of each January, April, July, and October, commencing ,
1997. The initial dividend will be $ (equivalent to $ per Depositary
Share). Dividends on the Preferred Stock will be cumulative from the date of
initial issuance. Each dividend will be payable to holders of record as they
appear on the stock register of the Company on the record dates fixed by the
Board of Directors of the Company.

If at any time there shall be outstanding shares of any other series of
preferred stock ranking junior to or on parity with the Preferred Stock as to
dividends, no dividends shall be declared or paid or set apart for payment on
any such other series for any period unless full cumulative dividends have been
or contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for such payment on the Preferred Stock for all
dividend payment periods terminating on or prior to the date of payment of such
dividends. If dividends on the Preferred Stock and on any other series of
preferred stock

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<PAGE> 47

ranking on parity as to dividends with the Preferred Stock are in arrears, in
making any dividend payment on account of such arrearages, the Company shall
make payments ratably upon all outstanding shares of the Preferred Stock and
shares of such other series of preferred stock in proportion to the respective
amounts of dividends in arrears on the Preferred Stock and on such other series
of preferred stock to the date of such dividend payment. Holders of shares of
the Preferred Stock shall not be entitled to any dividend, whether payable in
cash, property or stock, in excess of full cumulative dividends.

No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Preferred Stock which may be
in arrears. Unless full cumulative dividends on all outstanding shares of the
Preferred Stock shall have been paid or declared and set aside for payment for
all past dividend periods, no dividend (other than a dividend in Common Stock or
in any other stock ranking junior to the Preferred Stock as to dividends and
upon liquidation) shall be declared upon the Common Stock or upon any other
stock ranking junior to the Preferred Stock as to dividends and upon
liquidation, nor shall any Common Stock or any other stock of the Company
ranking junior to or on parity with the Preferred Stock as to dividends or upon
liquidation, be redeemed, purchased or otherwise acquired for any consideration
(or any monies to be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Company (except by conversion
into or exchange for stock of the Company ranking junior to the Preferred Stock
as to dividends and upon liquidation).

CONVERSION RIGHTS. Shares of the Preferred Stock will be convertible at any
time at the option of the holder into shares of Common Stock of the Company at a
conversion price of $ per share of Common Stock (equivalent to a
conversion rate of share of Common Stock for each Depositary Share),
subject to adjustment as described below (except that a share of Preferred Stock
that has been called for redemption will be convertible up to and including but
not after the close of business on the tenth day preceding the date fixed for
redemption).

The conversion price is subject to adjustment upon certain events,
including: the issuance of Common Stock of the Company as a dividend or
distribution on shares of Common Stock; subdivisions, combinations or
reclassifications of outstanding shares of Common Stock; the issuance to holders
of Common Stock generally of rights or warrants to subscribe for Common Stock at
less than the then current market price; or the distribution to holders of the
Common Stock of evidences of indebtedness, assets (excluding cash dividends or
distributions payable out of consolidated earnings or earned surplus), or rights
or warrants to subscribe for securities of the Company other than those
mentioned above.

In the case of (i) any consolidation or merger to which the Company is a
party (other than one in which the Company is the surviving corporation), (ii) a
sale, lease or conveyance of the assets of the Company as, or substantially as,
an entirety, or (iii) any statutory exchange of securities with another
corporation, there will be no adjustment of the conversion price, but the holder
of each share of Preferred Stock then outstanding will have the right thereafter
to convert such share into the kind and amount of securities, cash, or other
property that the holder would have owned or been entitled to receive
immediately after such consolidation, merger, statutory exchange, sale or
conveyance if such share had been converted immediately before the effective
date of such consolidation, merger, statutory exchange, sale or conveyance.

Any accrued and unpaid dividends at the time of conversion will be paid by
the Company in either cash or additional shares of Common Stock, as determined
by the Company, unless the Depositary Shares surrendered for conversion have
been called for redemption, in which event such accrued and unpaid dividends at
the time of conversion will be paid by the Company in cash.

No adjustment of the conversion price will be required to be made in any
case unless the adjustment amounts to one percent or more of the conversion
price, but any adjustment not made by reason of this limitation will be required
to be carried forward and taken into account in any subsequent adjustments.

REDEMPTION. Shares of Preferred Stock will not be redeemable prior to
, 2001. Thereafter, the shares of Preferred Stock will be redeemable
at the option of the Company, subject to the approval of the Federal Reserve
Board, in whole or in part, at any time or from time to time, on not less than
30 nor more than 60 days' notice by mail, at a redemption price of $100 per
share (equivalent to $25 per Depositary Share) plus

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<PAGE> 48

accrued and unpaid dividends to the redemption date. The Preferred Stock will
not be subject to any sinking fund or other obligation of the Company to redeem
or retire the Preferred Stock.

At its election, the Company, before the redemption date, may deposit the
funds for such redemption, in trust, with a designated depositary and authorize
such depositary to complete the redemption, and, after such deposit, all rights
of the holders of Preferred Stock and related Depositary Shares so called for
redemption shall cease, except the right to convert up to the close of business
on the tenth day prior to a redemption date and to receive the redemption price.
However, as and to the extent that the Company or the Depositary is required or
permitted under the abandoned property laws of any jurisdiction to escheat any
redemption funds held for the benefit of any holder, the Company and the
Depositary shall be absolved of any further liability or obligation to such
holder to the fullest extent provided by law. Notwithstanding the foregoing, if
any dividends on the Preferred Stock are in arrears, no shares of Preferred
Stock or Depositary Shares may be redeemed unless all outstanding shares of
Preferred Stock are simultaneously redeemed, and the Company shall not purchase
or otherwise acquire any shares of Preferred Stock or Depositary Shares;
provided, however, that the foregoing shall not prevent the purchase or
acquisition of shares of Preferred Stock or Depositary Shares by the Company
pursuant to a purchase or exchange offer made on the same terms to holders of
all outstanding shares of Preferred Stock or Depositary Shares.

If a notice of redemption has been given, from and after the redemption
date for the shares of Preferred Stock called for redemption (unless default
shall be made by the Company in providing money for the payment of the
redemption price of the shares so called for redemption), dividends on the
Preferred Stock so called for redemption shall cease to accrue and such shares
shall no longer be deemed to be outstanding, and all rights of the holders
thereof as shareholders of the Company (except the right to receive the
redemption price) shall cease. Upon surrender in accordance with such notice of
the certificates representing any shares to be redeemed (properly endorsed or
assigned for transfer, if the Board of Directors of the Company shall so require
and the notice shall so state), the redemption price set forth above shall be
paid out of funds provided by the Company. If fewer than all of the shares
represented by any such certificates are redeemed, a net certificate shall be
issued representing the unredeemed shares without cost to the holder thereof.

LIQUIDATION RIGHTS. In the event of any voluntary or involuntary
dissolution, liquidation, or winding up of the Company, the holders of the
Preferred Stock will be entitled to receive and to be paid out of assets of the
Company available for distribution to its stockholders, before any payment or
distribution is made to holders of Common Stock or any other class of stock
ranking junior to the Preferred Stock upon liquidation, a liquidating
distribution of $100 per share of Preferred Stock (equivalent to $25 per
Depositary Share) plus accrued and unpaid dividends. After payment of the full
amount of the liquidating distributions to which they are entitled, the holders
of the Preferred Stock will have no right or claim to any of the remaining
assets of the Company. If, upon any voluntary or involuntary dissolution,
liquidation, or winding up of the Company, the amounts payable with respect to
the Preferred Stock and any other shares of stock of the Company ranking as to
any such distribution on parity with the Preferred Stock are not paid in full,
the holders of the Preferred Stock and of such other shares will share ratably
in any such distribution of assets of the Company in proportion to the full
respective distributable amounts to which they are entitled. Neither the sale of
the assets of the Company substantially as an entirety, nor the merger or
consolidation of the Company into or with any other corporation shall be deemed
to be a dissolution, liquidation, or winding up, voluntary or involuntary, of
the Company. The Company may in the future issue additional series of preferred
stock ranking on parity with the Preferred Stock, either as to payment of
dividends or upon any distribution of assets in a liquidation of the Company.

VOTING. Except as otherwise required by applicable law or as described
below, holders of the Depositary Shares or the Preferred Stock will not be
entitled to vote on any matter, including but not limited to any merger,
consolidation or transfer of assets, and will not be entitled to notice of any
meeting of shareholders of the Company. Whenever the approval or other action of
holders of the Preferred Stock is required by applicable law or by the Articles
of Incorporation, each share of the Preferred Stock will be entitled to one
vote, and except as described below, the affirmative vote of a majority of such
shares at a meeting at which a majority of such shares are present or
represented will be sufficient to constitute such approval or other action.
Holders of Depositary Shares will be entitled to vote the shares of Preferred
Stock which their Depositary Shares represent. See "Description of Depositary
Shares."

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The affirmative vote of the holders of at least 66 2/3% of the outstanding
shares of Preferred Stock is required to amend the Articles of Incorporation of
the Company to create or authorize any class of stock ranking prior to the
Preferred Stock in respect of dividends or distribution of assets on liquidation
or otherwise alter or abolish the liquidation preferences or any other
preferential right of the Preferred Stock, reduce the redemption price to
otherwise alter any redemption rights of the Preferred Stock, alter or abolish
any right of the Preferred Stock to receive dividends, or exclude or limit the
voting rights as to these matters.

If at any time the Company falls in arrears in the payment of dividends on
the Preferred Stock in an aggregate amount at least equal to the full accrued
dividends for six quarterly dividend periods, the number of directors will be
increased by two and the holders of the Preferred Stock (and all classes of
preferred stock ranking on parity thereto), voting separately as a single class,
will have the right to elect two directors to fill the positions so created, and
such right will continue until all dividends in arrears for any past dividend
period have been paid in full.

Under regulations adopted by the Federal Reserve Board, if the holders of
the Preferred Stock become entitled to vote for the election of directors
because dividends on the Preferred Stock are in arrears, the series may then be
deemed a "class of voting securities", and a holder of, or a person seeking to
acquire, 25% or more of the shares of Preferred Stock (or a holder of 5% or more
if such holder otherwise exercises a "controlling influence" over the Company),
may then be required to seek the approval of the Federal Reserve Board to become
a bank holding company under the BHCA. If the holder fails to receive approval,
the holder would be required to sell some or all of the shares of Preferred
Stock. In addition, at such time as the Preferred Stock is deemed a class of
voting securities, any other bank holding company may be required to obtain the
approval of the Federal Reserve Board to retain or acquire 5% or more of the
series, and any person other than a bank holding company may be required by the
Change in Bank Control Act to obtain the prior approval the Federal Reserve
Board to acquire 10% or more of the Preferred Stock.

OTHER FEATURES OF PREFERRED STOCK. Holders of the Preferred Stock will have
no preemptive rights. Shares of Preferred Stock, when issued, will be validly
issued, fully paid and nonassessable. The Depositary Shares have been approved
for quotation on the Nasdaq National Market under the symbol "IBCPP."

Because the Company is a holding company, its rights and the rights of
holders of its securities, including the holders of Preferred Stock, to
participate in the assets of any subsidiary Bank upon the latter's liquidation
or recapitalization will be subject to the prior claims of the subsidiary's
creditors and preferred shareholders, if any, except to the extent the Company
may itself be a creditor with recognized claims against the subsidiary or the
holder of preferred shares, if any, of the subsidiary.

GENERAL

The Company's Articles of Incorporation and the Michigan Business
Corporation Act contain provisions which could be utilized by the Company to
impede any efforts to acquire control of the Company, namely:

Classified Board of Directors. The Company's Articles of Incorporation
provide for the division of the Board of Directors into three classes with
staggered three-year terms of office. Accordingly, because a person considering
the acquisition of voting control of the Company could not necessarily obtain
majority control of the Board of Directors until the second annual meeting of
the Company's shareholders following the acquisition of voting control, such a
person might be dissuaded from seeking to obtain voting control of the Company.

Michigan Fair Price Provisions. Chapter 7A of the Michigan Business
Corporation Act impacts certain business combinations involving Michigan
corporations such as the Company. Except in cases in which certain minimum
price, form of consideration, and procedural requirements are satisfied or for
certain transactions that may be approved in advance by the Company's Board of
Directors, higher than normal voting requirements are imposed with respect to
various transactions involving persons who own ten percent or more of the
Company's voting stock (referred to as "Interested Shareholders"). Transactions
to which the higher voting requirements apply require an advisory statement from
the Board of Directors and must be approved by not less than 90% of the votes of
each class of stock entitled to vote and by not less than two-thirds of the

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votes, other than the votes of Interested Shareholders who are (or whose
affiliates are) a party to the proposed transaction or an affiliate of the
Interested Shareholders, of each class entitled to vote.

Michigan Shareholder Equity Provisions. Chapter 7B of the Michigan Business
Corporation Act affects the voting rights of persons who acquire more than 20%,
33 1/3%, or 50 percent of a Michigan corporation's voting stock (referred to as
"Control Shares"). Chapter 7B denies shareholder voting rights to those persons
or entities who make purchase offers or investors who increase their holdings
above any of the Control Share levels, unless they are granted voting rights by
a majority vote of all disinterested shareholders (shareholders excluding the
bidders or owners of Control Shares and the corporation's management). If the
shareholders do not elect to grant voting rights to Control Shares, under
certain circumstances, the Control Shares may become subject to redemption.

FEDERAL INCOME TAX CONSIDERATIONS

The following is a general summary of the principal federal income tax
considerations relevant to holders of the Depositary Shares or the underlying
Preferred Stock. This summary is qualified in its entirety by reference to, and
is based upon, laws, regulations, rulings and decisions in effect on the date of
this Prospectus and as those laws, regulations, rulings and decisions were
interpreted on such date. This summary does not discuss all aspects of federal
income taxation that may be relevant to a particular investor or to certain
types of investors subject to special treatment under the federal income tax law
(for example, banks, dealers in securities, life insurance companies, tax-exempt
organizations and foreign taxpayers), or any aspect of state, local or foreign
tax laws.

DEPOSITARY SHARES

Owners of Depositary Shares will be treated for federal income tax purposes
as if they were owners of the Preferred Stock represented by such Depositary
Shares and, accordingly, will be entitled to take into account for federal
income tax purposes income and deductions to which they would be entitled if
they were holders of such Preferred Stock. In addition, under current law, (i)
no gain or loss will be recognized for federal income tax purposes upon the
withdrawal of Preferred Stock in exchange for Depositary Shares as provided in
the Deposit Agreement, (ii) the tax basis of each share of Preferred Stock to an
exchanging owner of Depositary Shares will, upon such exchange, be the same as
the aggregate tax basis of the Depositary Shares exchanged therefor, and (iii)
the holding period for shares of the Preferred Stock in the hands of any
exchanging owner of Depositary Shares who held such Depositary Shares as a
capital asset at the time of the exchange thereof for Preferred Stock will
include the period during which such person owned such Depositary Shares.

SALE OR EXCHANGE OF PREFERRED STOCK

A holder of Preferred Stock who sells or exchanges such shares will
recognize gain or loss equal to the difference between the amount realized and
the basis in the shares sold. Such gain or loss generally will be capital gain
or loss so long as the shares were held as a capital asset at the time of the
sale or exchange.

CONVERSION OF SHARES OF PREFERRED STOCK

Holders of shares of Preferred Stock who exercise their right to convert
such shares into shares of Common Stock will not recognize any gain or loss on
the conversion. The basis of the shares of Common Stock received on the
conversion will be the same as the basis of the shares of Preferred Stock
surrendered. The holding period for the shares of Common Stock received on the
conversion will include the holding period for the shares of Preferred Stock
surrendered.

48
<PAGE> 51

RECEIPT OF CASH IN LIEU OF FRACTIONAL SHARES

Holders of the Preferred Stock who receive cash in lieu of fractional
shares upon conversion of the Preferred Stock will be treated as if they had
received fractional shares of Common Stock and such fractional shares were
redeemed by the Company immediately thereafter. Under the Code section
applicable to redemptions, a stockholder who receives cash in a redemption that
qualifies as a "sale or exchange" will recognize capital gain or loss equal to
the difference between the amount of cash received and the tax basis of the
fractional shares. Any capital gain or capital loss resulting from the receipt
of cash in lieu of fractional shares will be long term if such stockholder has
held the Preferred Stock for more than one year.

Under the rules of Section 302 of the Code, if the receipt of cash in lieu
of fractional shares pursuant to the conversion does not constitute a "sale or
exchange" with respect to a given stockholder, then the cash received by the
stockholder in lieu of fractional shares would be treated as a dividend to the
extent that the Company has current and/or accumulated earnings and profits.

CONSTRUCTIVE STOCK DISTRIBUTIONS

Treasury regulations issued under Section 305 of the Internal Revenue Code
of 1986, as amended, treat as taxable events certain constructive distributions
of stock with respect to stock and convertible securities. An adjustment in the
conversion price of the Preferred Stock to reflect taxable distributions on
Common Stock (but not stock splits or nontaxable stock dividends) may be treated
as a constructive distribution of stock that is taxable as a dividend to the
extent that the Company has current and/or accumulated earnings and profits.

PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS AS TO
THE FEDERAL, STATE, AND LOCAL TAX CONSEQUENCES OF ACQUIRING, HOLDING,
CONVERTING, AND DISPOSING OF THE DEPOSITARY SHARES, PREFERRED STOCK AND COMMON
STOCK ISSUABLE UPON CONVERSION THEREOF.

49
<PAGE> 52

UNDERWRITING

Stifel, Nicolaus & Company, Incorporated (the "Underwriter") has agreed,
subject to the terms and conditions contained in the Underwriting Agreement, the
form of which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part, to purchase from the Company 600,000 Depositary Shares at
the initial offering price less the underwriting discount set forth on the cover
page of this Prospectus. The Underwriting Agreement provides that the obligation
of the Underwriter is subject to certain conditions precedent, and that the
Underwriter is committed to purchase all of such Depositary Shares, if any are
purchased.

The Underwriter proposes initially to offer the Depositary Shares to the
public on the terms set forth on the cover page of this Prospectus. The
Underwriter may allow to selected dealers a concession of not more than $
per Depositary Share, and the Underwriter may allow, and such dealer may
reallow, a concession of not more than $ to certain other dealers. After the
initial offering, the offering price and other selling terms may be changed by
the Underwriter. No reduction in such terms shall change the amount of proceeds
to be received by the Company as set forth on the cover page of this Prospectus.
The Depositary Shares are offered subject to receipt and acceptance by the
Underwriter, and to certain other conditions, including the right to reject an
order in whole or in part.

The Company has granted an option to the Underwriter, exercisable during
the 30-day period after the date of this Prospectus, to purchase up to a maximum
of 90,000 additional Depositary Shares to cover over-allotments, if any, at the
same price per Depositary Share as the initial 600,000 Depositary Shares to be
purchased by the Underwriter. The Underwriter may purchase such Depositary
Shares only to cover over-allotments made in connection with the Offering.

The Underwriting Agreement provides that the Company will indemnify the
Underwriter against certain liabilities, including civil liabilities under the
Securities Act of 1933, as amended, or will contribute to payments the
Underwriter may be required to make in respect thereof.

LEGAL MATTERS

The validity of the Preferred Stock offered hereby will be passed upon for
the Company by Varnum, Riddering, Schmidt & Howlett LLP, Grand Rapids, Michigan.
Certain legal matters will be passed upon for the Underwriter by Bryan Cave LLP,
St. Louis, Missouri.

EXPERTS

The consolidated financial statements of the Company as of December 31,
1995 and 1994, and for each of the years in the three year period ended December
31, 1995 included herein and incorporated by reference in this Prospectus and
elsewhere in the Registration Statement have been audited by KPMG Peat Marwick
LLP, independent accountants, to the extent and for the periods set forth in
their report appearing elsewhere herein and incorporated herein by reference.
The consolidated financial statements of the Company are included and
incorporated herein in reliance upon such report given upon the authority of
such firm as an expert in auditing and accounting.

The consolidated financial statements of North Bank Corporation as of
December 31, 1995 and 1994, and for each of the years in the three year period
ended December 31, 1995 included herein and incorporated by reference in this
Prospectus and elsewhere in this Registration Statement have been audited by
Crowe, Chizek and Company LLP, independent accountants, to the extent and for
the periods set forth in their report appearing elsewhere herein, and
incorporated herein by reference. The consolidated financial statements of North
Bank Corporation are included and incorporated herein in reliance upon such
report given upon the authority of such firm as an expert in auditing and
accounting.

50
<PAGE> 53

AVAILABLE INFORMATION

The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended, and, in accordance therewith files reports,
proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). The reports, proxy statements and other
information can be inspected and copied at the Public Reference Section of the
Commission Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices located at 7 World Trade Center, Suite 1300, New
York, New York 10048, and 500 West Madison Street, Suite 1400, Chicago, Illinois
60601. Copies of such materials can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site (which can be
found at http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission.

The Company has filed with the Commission a Registration Statement on Form
S-2 (herein, together with all amendments and exhibits thereto and documents
incorporated by reference, referred to as the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information, reference is hereby made to the
Registration Statement. The statements contained in this Prospectus concerning
the contents of any contract or other document referred to are not necessarily
complete. Where such contract or other document is an exhibit to the
Registration Statement, each statement is qualified in all respects by the
provisions of such exhibit, to which reference is hereby made for a full
statement of the provisions thereof.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's annual report on Form 10-K for the year ended December 31,
1995, its quarterly reports on Form 10-Q for the quarters ended March 31, 1996,
June 30, 1996 and September 30, 1996, and its current report on Form 8-K, dated
June 6, 1996 (as amended August 9, 1996), and which have been filed by the
Company with the Commission (File No. 0-7818), are incorporated herein by
reference.

Any statement contained in a document incorporated herein by reference
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.

Upon request, the Company will provide, without charge, copies of any
documents incorporated by reference herein (other than certain exhibits) to any
person to whom a Prospectus is delivered. Requests for such copies should be
directed to William R. Kohls, Secretary, Independent Bank Corporation, 230 West
Main Street, Ionia, Michigan 48846, telephone (616) 527-9450.

51
<PAGE> 54

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
INDEPENDENT BANK CORPORATION AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets as of December 31, 1995 and 1994......................... F- 2
Consolidated Statements of Operations for each of the years ended December 31, 1995,
1994 and 1993...................................................................... F- 3
Consolidated Statements of Cash Flows for each of the years ended December 31, 1995,
1994 and 1993...................................................................... F- 4
Consolidated Statements of Shareholders' Equity for each of the years ended December
31, 1995, 1994 and 1993............................................................ F- 5
Notes to Consolidated Financial Statements........................................... F- 6
Independent Auditors Report.......................................................... F-21
INDEPENDENT BANK CORPORATION UNAUDITED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
Consolidated Balance Sheet as of September 30, 1996 (unaudited)...................... F-22
Consolidated Statements of Operations for the nine months ended September 30, 1996
and 1995 (unaudited)............................................................... F-23
Consolidated Statements of Cash Flows for the nine months ended September 30, 1996
and 1995 (unaudited)............................................................... F-24
Consolidated Statements of Stockholders Equity for the nine months ended September
30, 1996 and 1995 (unaudited)...................................................... F-25
Notes to Interim Consolidated Financial Statements (unaudited)....................... F-26
NORTH BANK CORPORATION CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants.................................................... F-27
Consolidated Balance Sheets as of December 31, 1995 and 1994......................... F-28
Consolidated Statements of Income for the years ended December 31, 1995,
1994 and 1993...................................................................... F-29
Consolidated Statements of Changes in Shareholders' Equity for the years ended
December 31, 1995, 1994 and 1993................................................... F-30
Consolidated Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993...................................................................... F-31
Notes to Consolidated Financial Statements........................................... F-32
</TABLE>

F-1
<PAGE> 55

INDEPENDENT BANK CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents
Cash and due from banks................................................. $ 17,208,000 $ 22,869,000
Federal funds sold...................................................... 850,000
------------ ------------
Total Cash and Cash Equivalents................................ 17,208,000 23,719,000
------------ ------------
Securities available for sale............................................. 87,553,000 52,756,000
Securities held to maturity (fair value of $29,031,000 at December 31,
1995; $77,450,000 at December 31, 1994)................................. 27,906,000 77,721,000
Federal Home Loan Bank stock, at cost..................................... 7,710,000 3,433,000
Loans held for sale....................................................... 16,047,000 5,933,000
Loans
Commercial and agricultural............................................. 108,879,000 103,984,000
Real estate mortgage.................................................... 225,900,000 166,794,000
Installment............................................................. 83,265,000 65,947,000
------------ ------------
Total Loans.................................................... 418,044,000 336,725,000
Allowance for loan losses............................................... (5,243,000) (5,054,000)
------------ ------------
Net Loans...................................................... 412,801,000 331,671,000
Property and equipment, net............................................... 9,931,000 9,493,000
Accrued income and other assets........................................... 10,991,000 11,485,000
------------ ------------
Total Assets................................................... $590,147,000 $516,211,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing.................................................... $ 46,168,000 $ 48,641,000
Savings and NOW......................................................... 215,336,000 227,137,000
Time.................................................................... 150,120,000 133,693,000
------------ ------------
Total Deposits................................................. 411,624,000 409,471,000
Federal funds purchased................................................. 13,400,000 13,900,000
Other borrowings........................................................ 110,894,000 47,741,000
Accrued expenses and other liabilities.................................. 7,204,000 4,788,000
------------ ------------
Total Liabilities.............................................. 543,122,000 475,900,000
Commitments and contingent liabilities
Shareholders' Equity
Preferred stock, no par value -- 200,000 shares authorized; none
outstanding
Common stock, $1.00 par value -- 14,000,000 shares authorized; issued
and outstanding:
2,704,038 shares at December 31, 1995 and 2,589,163 shares at
December 31, 1994.................................................. 2,704,000 2,589,000
Capital surplus..................................................... 19,924,000 16,932,000
Retained earnings................................................... 23,683,000 22,910,000
Net unrealized gain (loss) on securities available for sale, net of
related tax effect................................................. 714,000 (2,120,000)
------------ ------------
Total Shareholders' Equity..................................... 47,025,000 40,311,000
------------ ------------
Total Liabilities and Shareholders' Equity................. $590,147,000 $516,211,000
============ ============
</TABLE>

See notes to consolidated financial statements.

F-2
<PAGE> 56

INDEPENDENT BANK CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans............................ $37,861,000 $29,107,000 $26,128,000
Securities available for sale......................... 2,692,000 2,853,000 1,232,000
Securities held to maturity
Taxable............................................ 3,227,000 3,684,000 4,744,000
Tax-exempt......................................... 1,781,000 1,716,000 1,731,000
Other investments..................................... 421,000 460,000 535,000
----------- ----------- -----------
Total Interest Income............................ 45,982,000 37,820,000 34,370,000
----------- ----------- -----------
INTEREST EXPENSE
Deposits.............................................. 12,470,000 11,092,000 12,027,000
Other borrowings...................................... 5,430,000 1,493,000 278,000
----------- ----------- -----------
Total Interest Expense........................... 17,900,000 12,585,000 12,305,000
----------- ----------- -----------
Net Interest Income.............................. 28,082,000 25,235,000 22,065,000
Provision for loan losses............................... 636,000 473,000 657,000
----------- ----------- -----------
Net Interest Income After Provision for Loan
Losses........................................ 27,446,000 24,762,000 21,408,000
----------- ----------- -----------
NON-INTEREST INCOME
Service charges on deposit accounts................... 1,919,000 1,892,000 1,589,000
Net gains (losses) on asset sales
Real estate mortgage loans......................... 728,000 249,000 721,000
Securities......................................... (120,000) (174,000) 637,000
Other income.......................................... 1,239,000 1,134,000 951,000
----------- ----------- -----------
Total Non-interest Income........................ 3,766,000 3,101,000 3,898,000
----------- ----------- -----------
NON-INTEREST EXPENSE
Salaries and employee benefits........................ 12,163,000 10,562,000 9,316,000
Occupancy, net........................................ 1,548,000 1,392,000 1,237,000
Furniture and fixtures................................ 1,345,000 1,248,000 968,000
Other expenses........................................ 6,646,000 6,301,000 6,014,000
----------- ----------- -----------
Total Non-interest Expense....................... 21,702,000 19,503,000 17,535,000
----------- ----------- -----------
Income Before Federal Income Tax................. 9,510,000 8,360,000 7,771,000
Federal income tax expense.............................. 2,700,000 2,329,000 2,165,000
----------- ----------- -----------
Net Income....................................... $ 6,810,000 $ 6,031,000 $ 5,606,000
=========== =========== ===========
Income per common share................................. $2.38 $2.09 $1.95
Cash dividends declared per common share................ $0.89 $0.72 $0.50
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE> 57

INDEPENDENT BANK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net Income............................................ $ 6,810,000 $ 6,031,000 $ 5,606,000
------------ ------------ ------------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM
OPERATING ACTIVITIES
Proceeds from sales of loans held for sale.......... 51,976,000 38,103,000 50,142,000
Disbursements for loans held for sale............... (54,262,000) (37,411,000) (49,397,000)
Provision for loan losses........................... 636,000 473,000 657,000
Deferred federal income tax expense (credit)........ (1,208,000) 474,000 (13,000)
Deferred loan fees.................................. 109,000 (179,000) (2,000)
Depreciation, amortization of intangible assets and
premiums and accretion of discounts on securities
and loans........................................ 2,247,000 2,494,000 1,875,000
Net gains on sales of real estate mortgage loans.... (728,000) (249,000) (721,000)
Net (gains) losses on sales of securities........... 120,000 174,000 (637,000)
Decrease in accrued income and other assets......... 286,000 1,891,000 499,000
Increase (decrease) in accrued expenses and
other liabilities................................ 2,587,000 373,000 (213,000)
------------ ------------ ------------
Total Adjustments................................... 1,763,000 6,143,000 2,190,000
------------ ------------ ------------
Net Cash from Operating Activities............. 8,573,000 12,174,000 7,796,000
------------ ------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sales of securities available for
sale............................................. 14,054,000 28,384,000 34,341,000
Proceeds from maturities of securities held to
maturity......................................... 13,920,000 25,094,000 9,589,000
Principal payments received on securities available
for sale......................................... 1,347,000 285,000
Principal payments received on securities held to
maturity......................................... 5,116,000 8,866,000 12,868,000
Purchases of securities available for sale.......... (732,000) (34,658,000) (45,589,000)
Purchases of securities held to maturity............ (19,423,000) (28,299,000) (30,389,000)
Portfolio loans made to customers, net of principal
payments received................................ (88,906,000) (54,751,000) 8,134,000
Acquisitions of banks, less cash received........... 3,533,000
Acquisition of branch office, less cash received.... 13,949,000
Capital expenditures................................ (1,642,000) (1,283,000) (2,105,000)
------------ ------------ ------------
Net Cash from Investing Activities............. (62,317,000) (56,362,000) (9,618,000)
------------ ------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES
Net increase (decrease) in total deposits........... (12,273,000) (14,149,000) 4,634,000
Net increase (decrease) in short-term borrowings.... (347,000) 16,252,000 (297,000)
Proceeds from Federal Home Loan Bank advances....... 104,000,000 44,000,000 6,000,000
Payments of Federal Home Loan Bank advances......... (41,000,000) (10,000,000)
Proceeds from issuance of long-term borrowings...... 3,000,000
Retirement of debt.................................. (2,750,000) (250,000)
Dividends paid...................................... (2,392,000) (1,926,000) (1,380,000)
Proceeds from issuance of common stock.............. 138,000 16,000
Repurchase of common stock.......................... (893,000) (924,000)
------------ ------------ ------------
Net Cash from Financing Activities............. 47,233,000 30,519,000 11,707,000
------------ ------------ ------------
Net Increase (Decrease) in Cash and Cash
Equivalents................................. (6,511,000) (13,669,000) 9,885,000
Cash and Cash Equivalents at Beginning of Period...... 23,719,000 37,388,000 27,503,000
------------ ------------ ------------
Cash and Cash Equivalents at End of Period..... $ 17,208,000 $ 23,719,000 $ 37,388,000
============ ============ ============
Cash paid during the period for
Interest............................................ $ 17,604,000 $ 12,696,000 $ 12,572,000
Income taxes........................................ 3,110,000 2,366,000 2,466,000
Transfer of loans to other real estate................ 555,000 254,000 556,000
Transfer of portfolio loans to held for sale.......... 7,100,000
Transfer of securities held to maturity to available
for sale............................................ 52,601,000 19,283,000
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE> 58

INDEPENDENT BANK CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
NET REALIZED
GAIN (LOSS) ON
SECURITIES TOTAL
COMMON CAPITAL RETAINED AVAILABLE SHAREHOLDERS'
STOCK SURPLUS EARNINGS FOR SALE EQUITY
---------- ----------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Balances at January 1, 1993... $2,590,000 $17,084,000 $14,793,000 $ 0 $ 34,467,000
Net income for 1993........... 5,606,000 5,606,000
Cash dividends declared, $.50
per share................... (1,432,000) (1,432,000)
Issuance of 21,477 shares of
common stock................ 21,000 387,000 408,000
---------- ----------- ----------- ----------- -----------
Balances at December 31,
1993........................ 2,611,000 17,471,000 18,967,000 0 39,049,000
Impact of change in accounting
for securities, net of
$46,000 of related tax
effect...................... 90,000 90,000
Net income for 1994........... 6,031,000 6,031,000
Cash dividends declared, $.72
per share................... (2,088,000) (2,088,000)
Issuance of 18,356 shares of
common stock................ 18,000 345,000 363,000
Repurchase of 40,000 shares of
common stock................ (40,000) (884,000) (924,000)
Net change in unrealized gain
(loss) on securities
available for sale, net of
$1,138,000 of related tax
effect...................... (2,210,000) (2,210,000)
---------- ----------- ----------- ----------- -----------
Balances at December 31,
1994........................ 2,589,000 16,932,000 22,910,000 (2,120,000) 40,311,000
Net income for 1995........... 6,810,000 6,810,000
Cash dividends declared, $.89
per share................... (2,506,000) (2,506,000)
5% stock dividend............. 129,000 3,386,000 (3,531,000) (16,000)
Issuance of 22,430 shares of
common stock................ 22,000 463,000 485,000
Repurchase of 35,900 shares of
common stock................ (36,000) (857,000) (893,000)
Transfer of securities held to
maturity to available for
sale, net of $443,000 of
related tax effect.......... 859,000 859,000
Net change in unrealized gain
(loss) on securities
available for sale, net of
$1,017,000 of related tax
effect...................... 1,975,000 1,975,000
---------- ----------- ----------- ----------- -----------
Balances at December 31,
1995........................ $2,704,000 $19,924,000 $23,683,000 $ 714,000 $ 47,025,000
========== =========== =========== =========== ===========
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE> 59

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

The accounting and reporting policies and practices of Independent Bank
Corporation and subsidiaries conform with generally accepted accounting
principles and prevailing practices within the banking industry. The following
summaries describe the significant accounting and reporting policies that are
employed in the preparation of the consolidated financial statements.

The Banks transact business in the single industry segment of commercial
banking. The Banks' activities cover traditional phases of commercial banking,
including checking and savings accounts, commercial and agricultural lending,
direct and indirect consumer financing, mortgage lending and deposit box
services. The principal markets are the rural and suburban communities across
lower Michigan that are served by the Banks' branch networks. Subject to
established underwriting criteria, the Banks may also participate in commercial
lending transactions with certain non-affiliated banks and purchase real estate
mortgage loans from third-party originators. The local economies of the
communities served by the Banks are relatively stable and reasonably
diversified.

Management is required to make estimates and assumptions in the preparation
of the financial statements which affect the amounts reported. Material
estimates that are particularly susceptible to changes in the near-term relate
to the determination of the allowance for loan losses. While Management uses
relevant information to recognize losses on loans, future provisions for related
losses may be necessary based on changes in economic conditions and customer
circumstances.

Principles of Consolidation -- The consolidated financial statements
include the accounts of Independent Bank Corporation and its subsidiaries. The
income, expenses, assets and liabilities of the subsidiaries are included in the
respective accounts of the consolidated financial statements, after elimination
of all material intercompany accounts and transactions.

Statements of Cash Flows -- For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, amounts due from banks, and federal funds
sold. Generally, federal funds are sold for one-day periods. The Company reports
net cash flows for customer loan and deposit transactions.

Loans Held for Sale -- Loans designated as held for sale are carried at the
lower of aggregate amortized cost or market value. Lower of cost or market value
adjustments, as well as realized gains and losses, are recorded in current
earnings. The Company will adopt Statement of Financial Accounting Standards No.
122, "Accounting for Mortgage Servicing Rights," ("SFAS #122") on January 1,
1996. SFAS #122 will require the Banks to prospectively recognize rights to
service mortgage loans as separate assets. This statement will also require the
Banks to assess these mortgage servicing rights for impairment based on the fair
value of those rights. The adoption of SFAS #122 on a prospective basis in the
first quarter of 1996 is not expected to have a significant effect on the
consolidated financial statements.

Securities -- The Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," ("SFAS #115") effective January 1, 1994. Under SFAS #115, the
Company is required to classify its securities as trading, held to maturity or
available for sale.

Trading securities are bought and held principally for the purpose of
selling them in the near-term and are reported at fair value with realized and
unrealized gains and losses included in earnings. The Company does not have any
trading securities. Securities classified as held to maturity represent those
securities for which the Banks have the positive intent and ability to hold
until maturity and are reported at cost, adjusted for amortization of premiums
and accretion of discounts computed on the level yield method. Securities
available for sale represent those securities not classified as trading or held
to maturity and are reported at fair value with unrealized gains and losses, net
of applicable income taxes reported as a separate component of shareholders'
equity. Gains and losses realized on the sale of securities available for sale
are determined using

F-6
<PAGE> 60

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
the specific identification method and are recognized on a trade-date basis.
Premiums and discounts are recognized in interest income computed on the level
yield method.

The Company adopted Statement of Financial Accounting Standards No. 119,
"Disclosure About Derivative Financial Instruments and Fair Value of Financial
Instruments," ("SFAS #119") effective December 31, 1994. SFAS #119 requires
disclosure about off-balance sheet financial instruments.

Loan Revenue Recognition -- Interest on loans is accrued based on the
principal amounts outstanding. The accrual of interest income is discontinued
when a loan becomes 90 days past due and the borrower's capacity to repay the
loan and collateral values appear insufficient. A non-accrual loan may be
restored to accrual status when interest and principal payments are current and
the loan appears otherwise collectible.

Certain loan fees, net of direct loan origination costs, are deferred and
recognized as an adjustment of yield over the life of the related loan. Fees
received in connection with loan commitments are deferred until the loan is
advanced and are then recognized over the life of the loan as an adjustment of
yield. Fees on commitments that expire unused are recognized at expiration. Fees
received for a letter of credit are recognized as fee revenue over its life.

Allowance for Loan Losses -- Some loans may not be repaid in full.
Therefore, an allowance for loan losses is maintained at a level which
management has determined to be adequate to absorb inherent losses. Management's
assessment of the allowance is based on prior years' loss experience, general
economic conditions and trends, as well as the review of specific loans.
Increases in the allowance are recorded by a provision for loan losses charged
to expense and, although management periodically allocates portions of the
allowance to specific loans and loan portfolios, the entire allowance is
available for any charge-offs which occur. Collection efforts may continue and
future recoveries may occur after a loan is charged-off.

The Company has adopted Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan," ("SFAS #114"). SFAS
#114, which has been subsequently amended by SFAS #118, requires the Company to
measure its investment in certain impaired loans based on one of three methods:
the loan's observable market price, the fair value of the collateral or the
present value of expected future cash flows discounted at the loan's effective
interest rate. The adoption of this Statement in 1995 did not have a significant
effect on the allowance for loan losses.

Property and Equipment -- Property and equipment is stated at cost less
accumulated depreciation and amortization. Depreciation and amortization is
computed using both straight-line and accelerated methods over the estimated
useful lives of the related assets.

Other Real Estate -- Other real estate represents properties acquired
through foreclosure or by acceptance of a deed in lieu of foreclosure. Prior to
1995, loan collateral which had been in-substance foreclosed was included in
other real estate. A portion of these properties has been sold on land contract
or financed at below market terms. The carrying values of these properties are
periodically evaluated and are adjusted to the lower of cost or fair value minus
estimated costs to sell. Other real estate and repossessed assets totaling
$760,000 and $1,381,000 at December 31, 1995 and 1994, respectively, are
included in other assets.

Intangible Assets -- Goodwill, which represents the excess of the purchase
price over the fair value of net tangible assets acquired, is amortized on a
straight-line basis over the period of expected benefit, generally 12 to 20
years. Goodwill totaled $1,099,000 and $1,188,000 as of December 31, 1995 and
1994, respectively. Other intangible assets are amortized using both
straight-line and accelerated methods over 12 to 15 years. Other intangibles
amounted to $1,407,000 and $1,096,000 as of December 31, 1995 and 1994,
respectively.

F-7
<PAGE> 61

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Income Taxes -- Effective January 1, 1993, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," ("SFAS
#109") with no material impact on the financial statements. SFAS #109 required
that the Company employ the asset and liability method of accounting for income
taxes. The objective of this method is to establish deferred tax assets and
liabilities for the temporary differences between the financial reporting basis
and the tax basis of the Company's assets and liabilities at enacted tax rates
expected to be in effect when such amounts are realized or settled. Under the
asset and liability method, the effect of a change in tax rates is recognized in
income in the period that includes the enactment date. The deferred tax asset is
subject to a valuation allowance for that portion of the asset for which it is
more likely than not that it will not be realized.

The Company and its subsidiaries file a consolidated federal income tax
return. Intercompany tax liabilities are settled as if each subsidiary filed a
separate return.

Common Stock -- At December 31, 1995, 46,387 shares of common stock were
reserved for issuance under the Incentive Share Grant Plan, 26,089 shares of
common stock were reserved for issuance under the dividend reinvestment plan and
128,275 shares of common stock were reserved for issuance under stock option
plans.

Earnings Per Share -- Earnings per share is based on 2,861,898 average
shares and equivalents outstanding in 1995, 2,890,368 in 1994 and 2,878,386 in
1993. Per share data has been adjusted to give retroactive effect to 5% stock
dividends in 1996 and 1995.

Retirement Plans -- The Company maintains an employee stock ownership plan
as well as a 401(k) plan for substantially all full-time employees.

Reclassification -- Certain amounts in the 1994 and 1993 financial
statements have been reclassified to conform with the 1995 presentation.

NOTE 2 -- ACQUISITIONS

On March 7, 1994, KSB Financial, Inc., ("KSB") merged with the Company. As
a result, The Kingston State Bank became a subsidiary of the Company. The
Company issued 225,649 shares of common stock in exchange for all of the
outstanding common stock of KSB. The merger was accounted for as a pooling of
interests and, accordingly, the accompanying financial statements were restated
to include the accounts and operations of KSB for all periods prior to the
merger.

Separate results of operations of the combining entities as of December 31,
follows:

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Net Interest Income After Provision For Loan Losses
Independent Bank Corporation..................................... $24,427,000 $19,606,000
KSB Financial, Inc. ............................................. 335,000 1,802,000
----------- -----------
Total......................................................... $24,762,000 $21,408,000
=========== ===========
Net Income
Independent Bank Corporation..................................... $ 6,021,000 $ 5,376,000
KSB Financial, Inc. ............................................. 10,000 230,000
----------- -----------
Total......................................................... $ 6,031,000 $ 5,606,000
=========== ===========
</TABLE>

In October 1993, the Company acquired American Home Bank ("American") and
Pioneer Bank ("Pioneer"). Cash consideration totaled $2,518,000 and $4,589,000
respectively. The transactions were accounted for as purchases and, accordingly,
the assets acquired and the liabilities assumed were recorded at

F-8
<PAGE> 62

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 2 -- ACQUISITIONS -- CONTINUED
fair value. The Company's results of operations include revenues and expenses
relating to American and Pioneer since September 30, 1993.

The pro-forma information presented in the following table is based on
historical results of the Company, American and Pioneer. The information has
been combined to present the results of operations as if the acquisitions had
occurred at the beginning of the period presented. The following pro-forma
results for the year ended December 31 are not necessarily indicative of the
results which would have actually been attained if the acquisitions had been
consummated in the past or what may be attained in the future.

<TABLE>
<CAPTION>
1993
-----------
(UNAUDITED)
<S> <C>
Total revenue.................................................................. $42,700,000
Net income..................................................................... 5,700,000
Earnings per share............................................................. 1.98
</TABLE>

NOTE 3 -- PENDING ACQUISITION

On February 2, 1996, the Company entered into a definitive agreement to
merge with North Bank Corporation ("NBC"). As a result, North Bank will become a
subsidiary of the Company. Cash consideration is anticipated to approximate
$16,300,000. At December 31, 1995, NBC had total assets and loans of
$153,600,000 and $91,200,000 (unaudited), respectively. The transaction is
subject to approval by NBC shareholders and the Federal Reserve Board and will
be accounted for as a purchase. Accordingly, the assets acquired and the
liabilities assumed will be recorded at fair value. Goodwill is anticipated to
approximate $6,000,000.

NOTE 4 -- RESTRICTIONS ON CASH AND DUE FROM BANKS

The Banks' legal reserve requirements were satisfied by maintaining
non-interest earning vault cash balances of $2,661,000 in 1995 and $2,547,000 in
1994. The Banks do not maintain compensating balances with correspondent banks.

NOTE 5 -- SECURITIES

Securities available for sale consist of the following at December 31:

<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED ------------------------ FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1995
U.S. Treasury............................. $23,189,000 $ 188,000 $ 105,000 $23,272,000
U.S. Government agencies.................. 6,557,000 79,000 13,000 6,623,000
Mortgage-backed securities................ 37,238,000 661,000 177,000 37,722,000
Obligations of states and political
subdivisions........................... 8,682,000 608,000 9,290,000
Other securities.......................... 10,805,000 2,000 161,000 10,646,000
----------- ---------- ---------- -----------
Total.................................. $86,471,000 $1,538,000 $ 456,000 $87,553,000
=========== ========== ========== ===========
1994
U.S. Treasury............................. $36,099,000 $1,375,000 $34,724,000
Mortgage-backed securities................ 12,718,000 1,034,000 11,684,000
Other securities.......................... 7,151,000 803,000 6,348,000
----------- ---------- ---------- -----------
Total.................................. $55,968,000 $ 0 $3,212,000 $52,756,000
=========== ========== ========== ===========
</TABLE>

F-9
<PAGE> 63

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 5 -- SECURITIES -- CONTINUED
Securities held to maturity consist of the following at December 31:

<TABLE>
<CAPTION>
UNREALIZED
AMORTIZED ------------------------ FAIR
COST GAINS LOSSES VALUE
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
1995
U.S. Government agencies.................. $ 2,559,000 $ 70,000 $ 2,629,000
Mortgage-backed securities................ 4,487,000 13,000 $ 18,000 4,482,000
Obligations of states and political
subdivisions........................... 20,142,000 1,074,000 12,000 21,204,000
Other securities.......................... 718,000 2,000 716,000
----------- ---------- ---------- -----------
Total.................................. $27,906,000 $1,157,000 $ 32,000 $29,031,000
=========== ========== ========== ===========
1994
U.S. Treasury............................. $ 5,738,000 $ 5,000 $ 223,000 $ 5,520,000
U.S. Government agencies.................. 11,004,000 371,000 10,633,000
Mortgage-backed securities................ 26,545,000 136,000 376,000 26,305,000
Obligations of states and political
subdivisions........................... 27,240,000 835,000 163,000 27,912,000
Other securities.......................... 7,194,000 114,000 7,080,000
----------- ---------- ---------- -----------
Total.................................. $77,721,000 $ 976,000 $1,247,000 $77,450,000
=========== ========== ========== ===========
</TABLE>

The amortized cost and approximate fair value of securities at December 31,
1995, by contractual maturity, follow. Actual maturities will differ from
contractual maturities because issuers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
-------------------------- --------------------------
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Maturing within one year.................. $13,004,000 $12,939,000 $ 1,187,000 $ 1,189,000
Maturing after one year but within five
years................................... 19,399,000 19,695,000 9,028,000 9,399,000
Maturing after five years but within ten
years................................... 9,922,000 10,446,000 10,607,000 11,229,000
Maturing after ten years.................. 2,591,000 2,726,000
----------- ----------- ----------- -----------
42,325,000 43,080,000 23,413,000 24,543,000
Mortgage-backed securities................ 37,238,000 37,722,000 4,487,000 4,482,000
Other securities.......................... 6,908,000 6,751,000 6,000 6,000
----------- ----------- ----------- -----------
Total................................ $86,471,000 $87,553,000 $27,906,000 $29,031,000
=========== =========== =========== ===========
</TABLE>

A summary of proceeds from the sale of securities available for sale and
realized gains and losses follows:

<TABLE>
<CAPTION>
REALIZED REALIZED
PROCEEDS GAINS LOSSES
----------- -------- --------
<S> <C> <C> <C>
1995....................................................... $14,054,000 $ 8,000 $128,000
1994....................................................... 28,384,000 228,000 402,000
1993....................................................... 34,341,000 658,000 21,000
</TABLE>

Securities with a book value of $20,816,000 and $10,948,000 at December 31,
1995 and 1994, respectively, were pledged to secure public deposits and for
other purposes as required by law.

There were no investment obligations of state and political subdivisions
that were payable from or secured by the same source of revenue or taxing
authority that exceeded 10% of consolidated shareholders' equity at December 31,
1995 or 1994.

F-10
<PAGE> 64

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 5 -- SECURITIES -- CONTINUED
During November 1995, the Financial Accounting Standards Board issued a
"Guide to Implementation of Statement #115 on Accounting for Certain Investment
in Debt and Equity Securities." This guide allowed for a one-time change in the
classification of securities pursuant to SFAS #115 as of the date of the
implementation guide, but no later than December 31, 1995. As a result, the
Banks made a transfer of $52,601,000 to securities available for sale.

NOTE 6 -- LOANS

An analysis of the allowance for loan losses for the years ended December 31
follows:

<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of period........................... $5,054,000 $5,053,000 $4,023,000
Allowance on loans acquired............................ 756,000
Provision charged to operating expense................. 636,000 473,000 657,000
Recoveries credited to allowance....................... 265,000 399,000 331,000
Loans charged against allowance........................ (712,000) (871,000) (714,000)
---------- ---------- ----------
Balance at end of period................................. $5,243,000 $5,054,000 $5,053,000
========== ========== ==========
</TABLE>

Loans are presented net of deferred income of $1,434,000 at December 31,
1995, and $1,325,000 at December 31, 1994.

Loans on non-accrual status, 90 days or more past due and still accruing
interest, or restructured amounted to $2,560,000, $2,834,000 and $3,213,000 at
December 31, 1995, 1994 and 1993, respectively. If these loans had continued to
accrue interest in accordance with their original terms, approximately $263,000,
$259,000, and $261,000 of interest income would have been realized in 1995, 1994
and 1993, respectively. Interest income accrued on these loans was approximately
$64,000, $102,000 and $143,000 in 1995, 1994 and 1993, respectively.

Impaired loans totaled approximately $3,200,000 at December 31, 1995. In
addition to certain non-performing loans, other than homogeneous residential
mortgage and installment loans, impaired loans include commercial and
agricultural loans totaling $1,800,000 that have been separately identified as
impaired. The Banks' average investment in impaired loans approximated
$2,300,000 in 1995. Cash receipts on impaired loans on non-accrual status are
generally applied to the principal balance. Interest income recognized on
impaired loans in 1995 was approximately $70,000. Certain impaired loans with a
balance of approximately $700,000 had specific allocations of the allowance for
loan losses calculated in accordance with SFAS #114 totaling approximately
$250,000 at December 31, 1995. As a result of the implementation of SFAS #114,
certain loans that had previously been identified as in-substance foreclosed and
classified as other real estate have been transferred to loans at December 31,
1995.

At December 31, 1995, 1994 and 1993, the Banks serviced loans totaling
approximately $124,000,000, $103,500,000 and $78,000,000, respectively, for the
benefit of third parties.

F-11
<PAGE> 65

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 7 -- PROPERTY AND EQUIPMENT

A summary of property and equipment at December 31 follows:

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Land............................................................... $ 1,662,000 $ 1,409,000
Buildings.......................................................... 9,554,000 8,956,000
Equipment.......................................................... 7,988,000 7,177,000
----------- -----------
19,204,000 17,542,000
Accumulated depreciation and amortization.......................... (9,273,000) (8,049,000)
----------- -----------
Property and equipment, net................................... $ 9,931,000 $ 9,493,000
=========== ===========
</TABLE>

NOTE 8 -- DEPOSITS

A summary of interest expense on deposits for the years ended December 31
follows:

<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Savings and NOW....................................... $ 5,515,000 $ 4,819,000 $ 4,887,000
Time deposits under $100,000.......................... 6,072,000 5,705,000 6,508,000
Time deposits of $100,000 or more..................... 883,000 568,000 632,000
----------- ----------- -----------
Total............................................ $12,470,000 $11,092,000 $12,027,000
=========== =========== ===========
</TABLE>

Aggregate time certificates of deposit and other time deposits in
denominations of $100,000 or more amounted to $19,497,000, $11,231,000, and
$14,124,000 at December 31, 1995, 1994 and 1993, respectively.

NOTE 9 -- OTHER BORROWINGS

A summary of other borrowings at December 31 follows:

<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Advances from Federal Home Loan Bank.............................. $103,000,000 $40,000,000
U.S. Treasury demand notes........................................ 1,223,000 1,985,000
Repurchase agreements............................................. 6,666,000 5,752,000
Other............................................................. 5,000 4,000
------------ -----------
Total........................................................ $110,894,000 $47,741,000
============ ===========
</TABLE>

Advances from the Federal Home Loan Bank ("FHLB") at December 31, 1995 and
1994, are secured by the Banks' unencumbered qualifying mortgage loans as well
as U.S. Treasury and government agency

F-12
<PAGE> 66

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 9 -- OTHER BORROWINGS -- CONTINUED
securities equal to at least 170% of outstanding advances. Maturities and
weighted average interest rates are as follows:

<TABLE>
<CAPTION>
1995 1994
-------------------- -------------------
AMOUNT RATE AMOUNT RATE
------------ ---- ----------- ----
<S> <C> <C> <C> <C>
Fixed rate advances
1995............................................. $ 3,000,000 6.90%
1996............................................. $ 27,000,000 5.61%
1997............................................. 34,000,000 6.01
1998............................................. 16,000,000 5.94
------------ ---- ----------- ----
Total fixed rate advances..................... 77,000,000 5.86 3,000,000 6.90
------------ ---- ----------- ----
Variable rate advances
1995............................................. 37,000,000 6.15
1996............................................. 15,000,000 5.76
1997............................................. 4,000,000 5.86
2000............................................. 7,000,000 6.66
------------ ---- ----------- ----
Total variable rate advances.................. 26,000,000 6.02 37,000,000 6.15
------------ ---- ----------- ----
Total advances................................ $103,000,000 5.90% $40,000,000 6.21%
============ ==== =========== ====
</TABLE>

Interest expense on advances amounted to $3,836,000, $761,000 and $55,000
for the years ending December 31, 1995, 1994 and 1993, respectively.

As members of the FHLB system, the Banks must own FHLB stock equal to the
greater of 1.0% of the unpaid principal balances of residential mortgage loans,
0.3% of its total assets, or 5.0% of its outstanding advances. At December 31,
1995, the Banks are in compliance with the FHLB stock ownership requirements.

The Company also has a $3,000,000 revolving credit agreement secured by the
capital stock of one of the Banks. At December 31, 1995, no amounts were
outstanding on this revolving credit agreement.

NOTE 10 -- FEDERAL INCOME TAX

The composition of federal income tax expense for the years ended December
31 follows:

<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- ----------
<S> <C> <C> <C>
Current................................................. $ 3,908,000 $1,855,000 $2,178,000
Deferred................................................ (1,208,000) 474,000 (13,000)
----------- ---------- ----------
Federal income tax expense......................... $ 2,700,000 $2,329,000 $2,165,000
=========== ========== ==========
</TABLE>

A reconciliation of federal income tax expense to the amount computed by
applying the statutory federal income tax rate of 34% to income before federal
income tax for the years ended December 31 follows:

<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Statutory rate applied to income before federal income
tax.................................................... $3,233,000 $2,842,000 $2,642,000
Tax-exempt interest income............................... (587,000) (586,000) (584,000)
Amortization of goodwill................................. 54,000 58,000 49,000
Other, net............................................... 15,000 58,000
---------- ---------- ----------
Federal income tax expense.......................... $2,700,000 $2,329,000 $2,165,000
========== ========== ==========
</TABLE>

F-13
<PAGE> 67

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 10 -- FEDERAL INCOME TAX -- CONTINUED
The deferred federal income tax benefit of $1,208,000 in 1995, expense of
$474,000 in 1994, and benefit of $13,000 in 1993, resulted from the tax effects
of temporary differences. There was no impact for changes in tax laws and rates
or changes in the valuation allowance for deferred tax assets.

The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31
follow:

<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Deferred tax assets
Allowance for loan losses.......................................... $ 961,000 $ 821,000
Deferred compensation.............................................. 598,000 481,000
Deferred loan fees................................................. 486,000 458,000
Deferred credit life premiums...................................... 145,000 136,000
Mortgage servicing fees............................................ 112,000 128,000
Unrealized loss on securities available for sale................... 1,092,000
Other.............................................................. 443,000 205,000
---------- ----------
Gross deferred tax assets....................................... 2,745,000 3,321,000
---------- ----------
Deferred tax liabilities
Unrealized gain on securities available for sale................... 368,000
Purchase premiums.................................................. 134,000 177,000
Securities and loans marked-to-market for tax purposes............. 622,000
Other.............................................................. 27,000
---------- ----------
Gross deferred tax liabilities.................................. 502,000 826,000
---------- ----------
Net deferred tax assets......................................... $2,243,000 $2,495,000
========== ==========
</TABLE>

The Company's aggregate income subject to federal income tax for the three
years ended December 31, 1995, totaled approximately $25,600,000. Consequently,
Management believes that at December 31, 1995, it is more likely than not that
the benefit of the gross deferred tax assets of $2,745,000 will be realized and
no valuation allowance is deemed necessary as of December 31, 1995.

NOTE 11 -- EMPLOYEE BENEFIT PLANS

During 1992, the Company's shareholders approved the adoption of stock
option plans for certain employees of the Company and the Banks and for
non-employee directors of the Company. An aggregate of 137,800 shares of common
stock has been authorized for issuance under the plans. Options granted under
these plans are exercisable not earlier than one year after the date of grant,
at a price equal to the fair market value of the common stock on the date of
grant, and expire five years after the date of grant.

F-14
<PAGE> 68

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 11 -- EMPLOYEE BENEFIT PLANS -- CONTINUED
The following table summarizes outstanding grants and stock option
transactions:

<TABLE>
<CAPTION>
NUMBER AVERAGE
OF EXERCISE
SHARES PRICE
------ --------
<S> <C> <C>
Outstanding at December 31, 1992......................................... 22,050 $13.95
Granted................................................................ 22,050 18.31
Forfeited.............................................................. (1,103) 14.29
------ ------
Outstanding at December 31, 1993......................................... 42,997 16.18
Granted................................................................ 23,153 18.14
Exercised.............................................................. (1,103) 14.29
------ ------
Outstanding at December 31, 1994......................................... 65,047 16.91
Granted................................................................ 26,460 22.57
Exercised.............................................................. (8,435) 16.23
Forfeited.............................................................. (1,103) 22.22
------ ------
Outstanding at December 31, 1995......................................... 81,969 $18.73
====== ======
</TABLE>

The Company has a 401(k) and an employee stock ownership plan covering
substantially all full-time employees of the Company and the Banks. The Company
matches employee contributions to the 401(k) up to a maximum of 3% of
participating employees' eligible wages. Contributions to the employee stock
ownership plan are determined annually and require approval of the Company's
Board of Directors. For the years ended December 31, 1995, 1994 and 1993,
$704,000, $365,000 and $452,000 respectively, was expensed for these retirement
plans.

Officers of the Company and the Banks participate in various
performance-based compensation plans. The 1988 Incentive Share Grant Plan
provides that the Board of Directors, at its sole discretion, may award
restricted shares of common stock to the participants in the Management
Incentive Compensation Plan in lieu of cash bonuses. The market value of such
incentive shares at the date of grant must equal twice the amount of the cash
incentive otherwise payable. Shares of common stock issued pursuant to the
Incentive Share Grant Plan vest over four years. For the years ended December
31, 1995, 1994 and 1993, amounts expensed for all incentive plans totaled
$876,000, $633,000, and $784,000, respectively.

The Company also provides certain health care and life insurance programs
to substantially all full-time employees. These insurance programs are available
to retired employees at their expense.

Effective January 1, 1996, the Company will adopt Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation", ("SFAS
#123"). SFAS #123 encourages companies to adopt a fair value method of
accounting for stock compensation plans. Those companies not adopting a fair
value method will be required to make pro-forma disclosures of net income and
earnings per share as if they had adopted the fair value accounting method.
Management anticipates the Company will elect the pro-forma disclosure method.

NOTE 12 -- FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In the normal course of business, the Banks enter into financial
instruments with off-balance sheet risk to meet the financing needs of customers
or to reduce exposure to fluctuations in interest rates. These financial
instruments may include commitments to extend credit, standby letters of credit
and interest rate swaps. There were no interest rate swaps in 1995, 1994 and
1993. Financial instruments involve varying degrees of credit and interest rate
risk in excess of amounts reflected in the consolidated balance sheets. Exposure
to

F-15
<PAGE> 69

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 12 -- FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK -- CONTINUED
credit risk in the event of non-performance by the counterparties to the
financial instruments for loan commitments to extend credit and letters of
credit is represented by the contractual amounts of those instruments.
Management does not, however, anticipate material losses as a result of these
financial instruments.

A summary of financial instruments with off-balance sheet risk at December
31 follows:

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Financial instruments whose risk is represented by contract amounts
Commitments to extend credit..................................... $50,821,000 $34,266,000
Standby letters of credit........................................ 2,427,000 2,858,000
</TABLE>

Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and generally require payment of a fee. Since many of the commitments are
expected to expire without being drawn upon, the commitment amounts do not
represent future cash requirements. Commitments are issued subject to similar
underwriting standards, including collateral requirements, as are generally
involved in the extension of credit facilities.

Standby letters of credit are written conditional commitments issued by the
Banks to guarantee the performance of a customer to a third party, primarily
public and private borrowing arrangements. Standby letters of credit generally
extend for periods of less than one year. The credit risk involved in such
transactions is essentially the same as that involved in extending loan
facilities and, accordingly, standby letters of credit are issued subject to
similar underwriting standards, including collateral requirements, as are
generally involved in the extension of credit facilities.

NOTE 13 -- RELATED PARTY TRANSACTIONS

Certain directors and executive officers of the Company and the Banks,
including companies in which they are officers or have significant ownership,
were loan customers of the Banks during 1995 and 1994.

A summary of loans to directors and executive officers whose borrowing
relationship exceeds $60,000, and to entities in which they own a 10% or more
voting interest for the years ended December 31 follows:

<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Balance at beginning of period..................................... $ 5,322,000 $ 4,765,000
New loans and advances........................................... 3,265,000 7,145,000
Repayments....................................................... (3,900,000) (6,588,000)
----------- -----------
Balance at end of period........................................... $ 4,687,000 $ 5,322,000
=========== ===========
</TABLE>

F-16
<PAGE> 70

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 14 -- OTHER OPERATING EXPENSES

Other operating expenses for the years ended December 31, follow:

<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Loan and collection...................................... $1,030,000 $ 626,000 $ 724,000
Computer processing...................................... 818,000 786,000 674,000
Communications........................................... 791,000 728,000 614,000
Supplies................................................. 561,000 498,000 423,000
State taxes.............................................. 537,000 496,000 435,000
Deposit insurance........................................ 499,000 966,000 858,000
Legal and professional................................... 307,000 406,000 394,000
Other.................................................... 2,103,000 1,795,000 1,892,000
---------- ---------- ----------
Total............................................... $6,646,000 $6,301,000 $6,014,000
========== ========== ==========
</TABLE>

NOTE 15 -- UNDISTRIBUTED INCOME AND DIVIDEND LIMITATIONS OF SUBSIDIARIES

Capital guidelines adopted by Federal and State regulatory agencies and
restrictions imposed by law limit the amount of cash dividends the Banks can pay
to the Company. At December 31, 1995, using the most restrictive of these
conditions for each Bank, the aggregate cash dividends that the Banks can pay
the Company without prior approval is approximately $18,930,000. It is not the
intent of Management to have dividends paid in amounts which would reduce the
capital of the Banks to levels below those which are considered prudent by
management and in accordance with guidelines of regulatory authorities.

NOTE 16 -- FAIR VALUES OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 107, "Disclosures About
Fair Value of Financial Instruments" requires that the Company disclose
estimated fair values for its financial instruments. Many of the Company's
financial instruments lack an available trading market. Further, it is the
Company's general practice and intent to hold the majority of its financial
instruments to maturity. Significant estimates and assumptions were used to
determine the fair value of financial instruments. These estimates are
subjective in nature, involving uncertainties and matters of judgment, and
therefore, fair values cannot be determined with precision. Changes in
assumptions could significantly affect the estimates.

Estimated fair values have been determined using available data and an
estimation methodology that is considered suitable for each category of
financial instrument. For assets and liabilities with floating interest rates
which reprice frequently and without significant credit risk, it is presumed
that estimated fair values approximate the recorded book balances.

Financial instrument assets actively traded in a secondary market, such as
securities, have been valued using quoted market prices while recorded book
balances have been used for cash and due from banks and federal funds sold.

The fair value of loans is calculated by discounting estimated future cash
flows using estimated market discount rates that reflect credit and interest
rate risk inherent in the loan.

Financial instruments with stated maturities, such as certificates of
deposit, have been valued based on the discounted value of contractual cash
flows using a discount rate approximating current market rates for liabilities
with similar remaining maturities.

Financial instrument liabilities with no stated maturities, such as demand
deposits, savings, NOW and money market accounts, have a fair value equal to the
amount payable on demand.

F-17
<PAGE> 71

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 16 -- FAIR VALUES OF FINANCIAL INSTRUMENTS -- CONTINUED
The estimated fair values and recorded book balances at December 31 follow:

<TABLE>
<CAPTION>
1995 1994
--------------------- ---------------------
ESTIMATED RECORDED ESTIMATED RECORDED
FAIR BOOK FAIR BOOK
VALUE BALANCE VALUE BALANCE
--------- -------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks........................... $ 17,200 $ 17,200 $ 22,900 $ 22,900
Federal funds sold................................ 900 900
Securities available for sale..................... 87,600 87,600 52,800 52,800
Securities held to maturity....................... 29,000 27,900 77,500 77,700
Net loans and loans held for sale................. 432,000 428,800 330,700 337,600
LIABILITIES
Deposits with no stated maturities................ $ 261,500 $261,500 $ 275,800 $275,800
Deposits with stated maturities................... 150,300 150,100 132,500 133,700
Other borrowings.................................. 124,400 124,300 61,600 61,600
</TABLE>

The fair values for commitments to extend credit and standby letters of
credit are estimated to approximate their aggregate book balance.

Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result from
offering for sale the entire holdings of a particular financial instrument.

Fair value estimates are based on existing on and off-balance sheet
financial instruments without attempting to estimate the value of anticipated
future business, the value of future earnings attributable to off-balance sheet
activities and the value of assets and liabilities that are not considered
financial instruments.

Fair value estimates for deposit accounts do not include the value of the
substantial core deposit intangible asset resulting from the low-cost funding
provided by the deposit liabilities compared to the cost of borrowing funds in
the market.

F-18
<PAGE> 72

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 17 -- INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL
INFORMATION

Presented below are condensed financial statements for the parent company.

CONDENSED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Cash and due from banks.......................................... $ 2,761,000 $ 1,865,000
Investment in subsidiaries....................................... 44,212,000 38,058,000
Other assets..................................................... 1,713,000 1,667,000
----------- -----------
Total Assets.................................................. $48,686,000 $41,590,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Other liabilities................................................ $ 1,661,000 $ 1,279,000
Shareholders' equity............................................. 47,025,000 40,311,000
----------- -----------
Total Liabilities and Shareholders' Equity.................... $48,686,000 $41,590,000
=========== ===========
</TABLE>

CONDENSED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
OPERATING INCOME
Dividends from subsidiaries............................ $4,500,000 $5,560,000 $5,426,000
Management fees from subsidiaries and other income..... 4,248,000 4,028,000 3,362,000
---------- ---------- ----------
Total Operating Income.............................. 8,748,000 9,588,000 8,788,000
---------- ---------- ----------
OPERATING EXPENSES
Interest expense....................................... 120,000 34,000
Administrative and other expenses...................... 5,226,000 4,849,000 4,387,000
---------- ---------- ----------
Total Operating Expenses............................ 5,226,000 4,969,000 4,421,000
---------- ---------- ----------
Income Before Federal Income Tax and Undistributed
Net Income of Subsidiaries........................ 3,522,000 4,619,000 4,367,000
Federal income tax credit................................ 320,000 310,000 313,000
---------- ---------- ----------
Income Before Equity in Undistributed Net Income of
Subsidiaries...................................... 3,842,000 4,929,000 4,680,000
Equity in undistributed net income of subsidiaries....... 2,968,000 1,102,000 926,000
---------- ---------- ----------
Net Income.......................................... $6,810,000 $6,031,000 $5,606,000
========== ========== ==========
</TABLE>

F-19
<PAGE> 73

INDEPENDENT BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 17 -- INDEPENDENT BANK CORPORATION (PARENT COMPANY ONLY) FINANCIAL
INFORMATION -- CONTINUED
CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net Income.............................................. $ 6,810,000 $ 6,031,000 $ 5,606,000
----------- ----------- -----------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM
OPERATING ACTIVITIES
Depreciation, amortization of intangible assets and
premiums, and accretion of discounts on securities
and loans.......................................... 297,000 286,000 215,000
(Increase) decrease in other assets................... (604,000) 547,000 (332,000)
Increase in other liabilities......................... 599,000 298,000 560,000
Equity in undistributed net income of subsidiaries.... (2,968,000) (1,102,000) (926,000)
----------- ----------- -----------
Total Adjustments................................ (2,676,000) 29,000 (483,000)
----------- ----------- -----------
Net Cash from Operating Activities............... 4,134,000 6,060,000 5,123,000
----------- ----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of securities available for sale............. (241,000) (233,000)
Capital expenditures.................................. (127,000) (142,000) (594,000)
Investment in subsidiaries............................ (7,214,000)
Proceeds from sale of property and equipment.......... 36,000 13,000
----------- ----------- -----------
Net Cash from Investing Activities............... (91,000) (383,000) (8,028,000)
----------- ----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term borrowings........ 3,000,000
Repayment of debt..................................... (2,750,000) (250,000)
Dividends paid........................................ (2,392,000) (1,926,000) (1,380,000)
Proceeds from issuance of common stock................ 138,000 16,000
Repurchase of common stock............................ (893,000) (924,000)
----------- ----------- -----------
Net Cash from Financing Activities............... (3,147,000) (5,584,000) 1,370,000
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash
Equivalents................................... 896,000 93,000 (1,535,000)
Cash and Cash Equivalents at Beginning of Period........ 1,865,000 1,772,000 3,307,000
----------- ----------- -----------
Cash and Cash Equivalents at End of Period....... $ 2,761,000 $ 1,865,000 $ 1,772,000
=========== =========== ===========
</TABLE>

F-20
<PAGE> 74

INDEPENDENT BANK CORPORATION

INDEPENDENT AUDITOR'S REPORT

BOARD OF DIRECTORS AND SHAREHOLDERS
INDEPENDENT BANK CORPORATION
IONIA, MICHIGAN

We have audited the accompanying consolidated statements of financial
condition of Independent Bank Corporation and subsidiaries as of December 31,
1995 and 1994, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1995. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express our
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Independent
Bank Corporation and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.

As discussed in note 1 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in 1993 to adopt the
provisions of Financial Accounting Standards Board's Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." As discussed
in note 1, the Company changed its method of accounting for investments to adopt
the provisions of Financial Accounting Standards Board's SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" at January 1,
1994. As discussed in note 1, the Company changed its method of accounting for
impaired loans in 1995 to adopt the provisions of Financial Accounting Standards
Board's SFAS No. 114, "Accounting by Creditors for Impairment of a Loan", as
amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan --
Income Recognition and Disclosures."

KPMG Peat Marwick LLP
Lansing, Michigan
February 1, 1996

F-21
<PAGE> 75

INDEPENDENT BANK CORPORATION

INTERIM CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>
SEPTEMBER 30,
1996
-------------
(UNAUDITED)
<S> <C>
ASSETS
Cash and due from banks....................................................... $ 26,601,000
Securities available for sale................................................. 122,487,000
Securities held to maturity (fair value of $27,698,000 at September 30,
1996)....................................................................... 26,874,000
Federal Home Loan Bank stock, at cost......................................... 10,198,000
Loans held for sale........................................................... 10,389,000
Loans
Commercial and agricultural................................................. 141,747,000
Real estate mortgage........................................................ 310,079,000
Installment................................................................. 113,592,000
------------
Total Loans....................................................... 565,418,000
Allowance for loan losses................................................... (6,720,000)
------------
Net Loans......................................................... 558,698,000
Property and equipment, net................................................... 16,624,000
Accrued income and other assets............................................... 21,281,000
------------
Total Assets...................................................... $ 793,152,000
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing........................................................ $ 68,685,000
Savings and NOW............................................................. 263,841,000
Time........................................................................ 209,255,000
------------
Total Deposits.................................................... 541,781,000
Federal funds purchased....................................................... 37,100,000
Other borrowings.............................................................. 153,859,000
Accrued expenses and other liabilities........................................ 9,679,000
------------
Total Liabilities................................................. 742,419,000
------------
Shareholders' Equity
Preferred stock, no par value -- 200,000 shares authorized; none outstanding
Common stock, $1.00 par value -- 14,000,000 shares authorized; issued and
outstanding: 2,861,399 shares at September 30, 1996...................... 2,861,000
Capital surplus............................................................. 24,256,000
Retained earnings........................................................... 23,447,000
Net unrealized gain on securities available for sale, net of related tax
effect................................................................... 169,000
------------
Total Shareholders' Equity........................................ 50,733,000
------------
Total Liabilities and Shareholders' Equity..................... $ 793,152,000
============
</TABLE>

See notes to interim consolidated financial statements.

F-22
<PAGE> 76

INDEPENDENT BANK CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30,
--------------------------
1996 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans....................................... $35,587,000 $27,370,000
Securities
Taxable....................................................... 4,873,000 4,572,000
Tax-exempt.................................................... 1,502,000 1,328,000
Other investments................................................ 636,000 264,000
----------- -----------
Total Interest Income....................................... 42,598,000 33,534,000
----------- -----------
INTEREST EXPENSE
Deposits......................................................... 11,598,000 9,193,000
Other borrowings................................................. 5,950,000 3,688,000
----------- -----------
Total Interest Expense...................................... 17,548,000 12,881,000
----------- -----------
Net Interest Income......................................... 25,050,000 20,653,000
Provision for loan losses.......................................... 942,000 477,000
----------- -----------
Net Interest Income After
Provision for Loan Losses................................ 24,108,000 20,176,000
----------- -----------
NON-INTEREST INCOME
Service charges on deposit accounts.............................. 1,641,000 1,439,000
Net gains (losses) on asset sales
Real estate mortgage loans.................................... 1,251,000 405,000
Securities.................................................... (130,000) (110,000)
Other income..................................................... 1,219,000 922,000
----------- -----------
Total Non-interest Income................................... 3,981,000 2,656,000
----------- -----------
NON-INTEREST EXPENSE
Salaries and employee benefits................................... 11,404,000 8,903,000
Occupancy, net................................................... 1,458,000 1,135,000
Furniture and fixtures........................................... 1,337,000 975,000
Other expenses................................................... 5,605,000 4,884,000
----------- -----------
Total Non-interest Expense.................................. 19,804,000 15,897,000
----------- -----------
Income Before Federal Income Tax............................ 8,285,000 6,935,000
Federal income tax expense......................................... 2,466,000 1,948,000
----------- -----------
Net Income.................................................. $ 5,819,000 $ 4,987,000
=========== ===========
Net income per common share........................................ $2.02 $1.74
=========== ===========
Cash dividends declared per common share........................... $0.74 $0.66
=========== ===========
</TABLE>

See notes to interim consolidated financial statements.

F-23
<PAGE> 77

INDEPENDENT BANK CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------
1996 1995
------------ ------------
(UNAUDITED)
<S> <C> <C>
Net Income....................................................... $ 5,819,000 $ 4,987,000
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH FROM OPERATING
ACTIVITIES
Proceeds from sales of loans held for sale..................... 78,515,000 33,439,000
Disbursements for loans held for sale.......................... (69,135,000) (31,883,000)
Provision for loan losses...................................... 942,000 477,000
Deferred loan fees............................................. 158,000 23,000
Depreciation, amortization of intangible assets and premiums
and accretion of discounts on investment securities and
loans....................................................... 1,899,000 1,679,000
Net losses on sales of securities.............................. 130,000 110,000
Net gains on sales of real estate mortgage loans............... (1,251,000) (405,000)
Increase in accrued income and other assets.................... (7,784,000) (751,000)
Increase in accrued expenses and other liabilities............. 1,114,000 1,993,000
------------ ------------
Total Adjustments........................................... 4,588,000 4,682,000
------------ ------------
Net Cash from Operating Activities........................ 10,407,000 9,669,000
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from sales of securities available for sale........... 15,907,000 13,152,000
Proceeds from maturities of securities held to maturity........ 8,898,000 10,925,000
Principal payments received on securities available for sale... 6,785,000 863,000
Principal payments received on securities held to maturity..... 601,000 3,867,000
Purchases of securities available for sale..................... (30,839,000)
Purchases of securities held to maturity....................... (295,000) (15,715,000)
Portfolio loans made to customers net of principal payments
received.................................................... (63,355,000) (75,788,000)
Acquisition of branch office, less cash received............... 13,949,000
Acquisition of bank, less cash received........................ 9,478,000
Capital expenditures........................................... (2,607,000) (1,133,000)
------------ ------------
Net Cash from Investing Activities........................ (55,427,000) (49,880,000)
------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES
Net decrease in total deposits................................. (1,378,000) (15,371,000)
Net increase in short-term borrowings.......................... 20,165,000 6,663,000
Proceeds from Federal Home Loan Bank advances.................. 45,000,000 76,000,000
Payments of Federal Home Loan Bank advances.................... (17,000,000) (30,000,000)
Proceeds from issuance of long-term borrowings................. 10,000,000
Retirement of debt............................................. (500,000)
Dividends paid................................................. (1,933,000) (1,758,000)
Proceeds from issuance of common stock......................... 59,000 81,000
Repurchase of common stock..................................... (755,000)
------------ ------------
Net Cash from Financing Activities........................ 54,413,000 34,860,000
------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents...... 9,393,000 (5,351,000)
Cash and Cash Equivalents at Beginning of Period................. 17,208,000 23,719,000
------------ ------------
Cash and Cash Equivalents at End of Period................ $ 26,601,000 $ 18,368,000
============ ============
Cash paid during the period for:
Interest....................................................... $ 16,935,000 $ 12,530,000
Income taxes................................................... 2,990,000 2,150,000
Transfer of loans to other real estate........................... 808,000 367,000
</TABLE>

See notes to interim consolidated financial statements.

F-24
<PAGE> 78

INDEPENDENT BANK CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1996 1995
----------- -----------
(UNAUDITED)
<S> <C> <C>
Balance at beginning of period..................................... $47,025,000 $40,311,000
Net income....................................................... 5,819,000 4,987,000
Cash dividends declared.......................................... (2,125,000) (1,861,000)
Issuance of common stock......................................... 559,000 430,000
Repurchase of common stock....................................... (755,000)
Net change in unrealized gain on securities available for sale,
net of related tax effect..................................... (545,000) 1,794,000
----------- -----------
Balance at end of period........................................... $50,733,000 $44,906,000
=========== ===========
</TABLE>

See notes to interim consolidated financial statements.

F-25
<PAGE> 79

INDEPENDENT BANK CORPORATION

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

1. In the opinion of management of the Company, the accompanying unaudited
consolidated financial statements contain all the adjustments (consisting only
of normal recurring accruals) necessary to present fairly the consolidated
financial condition of the Company as of September 30, 1996 and the results of
operations for the nine-month periods ended September 30, 1996 and 1995.

2. Management's assessment of the allowance for loan losses is based on an
evaluation of the loan portfolio, recent loss experience, current economic
conditions and other pertinent factors. Loans on non-accrual status, past due
more than 90 days, or restructured amounted to $3,451,000 at September 30, 1996.
(See Management's Discussion and Analysis of Financial Condition and Results of
Operations).

3. The provision for income taxes represents federal income tax expense
calculated using annualized rates on taxable income generated during the
respective periods.

4. The unaudited pro forma combined results for the Company and NBC set
forth below are presented as if the NBC Acquisition had occurred at the
beginning of the periods presented.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
Revenues, net....................................... $51,700,000 $45,800,000
Net income.......................................... 5,600,000 4,600,000
Net income per common share......................... $1.93 $1.60
</TABLE>

5. The results of operations for the nine-month period ended September 30,
1996, are not necessarily indicative of the results to be expected for the full
year.

6. The Company adopted Statement of Financial Accounting Standards No. 122,
"Accounting for Mortgage Servicing Rights," effective January 1, 1996. (See
Management's Discussion and Analysis of Financial Condition and Results of
Operations).

F-26
<PAGE> 80

REPORT OF INDEPENDENT ACCOUNTANTS

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
NORTH BANK CORPORATION
HALE, MICHIGAN

We have audited the accompanying consolidated balance sheets of North Bank
Corporation as of December 31, 1995 and 1994, and the related consolidated
statements of income, changes in shareholders' equity and cash flows for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Corporation's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of North Bank
Corporation as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.

As discussed in Note 2 to the consolidated financial statements, the
Corporation changed its methods of accounting for impaired loans in 1995 and
investment securities and income taxes in 1993 to conform to new accounting
standards. The change in accounting for income taxes was made retroactively to
January 1, 1991.

Crowe, Chizek and Company LLP

Grand Rapids, Michigan
March 8, 1996

F-27
<PAGE> 81

NORTH BANK CORPORATION

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Cash and due from banks (Note 3)........................................ $ 6,421 $ 8,121
Federal funds sold...................................................... 200
-------- --------
Total cash and cash equivalents.................................... 6,621 8,121
Securities available for sale (Note 4).................................. 48,665 26,503
Securities held to maturity (estimated fair value of $28,755) (Note
4).................................................................... 30,584
-------- --------
Total securities................................................... 48,665 57,087
Total loans (Note 5).................................................... 90,331 81,833
Less allowance for loan losses (Note 6)................................. (988) (949)
-------- --------
Net Loans.......................................................... 89,343 80,884
Premises and equipment -- net (Note 7).................................. 5,580 6,047
Accrued interest receivable............................................. 1,102 1,010
Other real estate....................................................... 118 628
Other assets............................................................ 1,287 2,496
-------- --------
Total assets....................................................... $152,716 $156,273
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Noninterest-bearing demand......................................... $ 17,872 $ 17,189
Interest-bearing transaction accounts.............................. 19,858 19,292
Savings............................................................ 38,444 40,157
Time (Note 8)...................................................... 55,591 47,127
-------- --------
Total deposits................................................ 131,765 123,765
Long-term borrowings (Note 10)........................................ 9,000 19,728
Federal funds purchased............................................... 1,100
Accrued interest payable.............................................. 516 496
Other liabilities (Note 11)........................................... 789 1,661
-------- --------
Total liabilities.................................................. 142,070 146,750
Shareholders' Equity
Common stock, no par value, 1,500,000 shares authorized; 482,040 and
481,478 issued and outstanding in 1995 and 1994, respectively...... 1,207 1,204
Surplus............................................................... 5,635 5,629
Retained earnings..................................................... 3,841 4,159
Net unrealized appreciation (depreciation) on available for sale
securities, net of tax of $19 in 1995 and $585 in 1994 (Note 4).... (37) (1,136)
Minimum pension liability adjustment, net of tax of $171 in 1994 (Note
11)................................................................ (333)
-------- --------
Total shareholders' equity......................................... 10,646 9,523
-------- --------
Total liabilities and shareholders' equity.................... $152,716 $156,273
======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-28
<PAGE> 82

NORTH BANK CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1995 1994 1993
------- ------ ------
<S> <C> <C> <C>
INTEREST INCOME
Loans, including fees............................................ $ 7,765 $6,539 $6,406
Securities
Taxable....................................................... 3,002 2,372 2,715
Tax-exempt.................................................... 342 584 814
Federal funds sold............................................... 124 70 62
------- ------ ------
Total interest income.................................... 11,233 9,565 9,997
INTEREST EXPENSE
Deposits......................................................... 4,401 3,127 3,917
Borrowings....................................................... 983 803 226
------- ------ ------
Total interest expense................................... 5,384 3,930 4,143
------- ------ ------
Net interest income...................................... 5,849 5,635 5,854
Provision for loan losses (Note 6)................................. (307) (180) (150)
------- ------ ------
Net interest income after provision for loan losses................ 5,542 5,455 5,704
Other operating income
Service charges on deposit accounts.............................. 404 422 394
Net gain (loss) on sales of securities........................... (111) (374) 1,201
Gain on sales of loans........................................... 424 116 441
Gain on sale of mortgage servicing rights........................ 124
Other operating income........................................... 361 353 420
------- ------ ------
Total other operating income............................. 1,202 517 2,456
Other operating expenses
Salaries and employee benefits (Note 11)......................... 2,738 2,745 3,076
Pension settlement (Note 11)..................................... 774
Net occupancy.................................................... 468 407 373
Equipment........................................................ 740 651 581
Legal fees....................................................... 132 109 131
FDIC premium..................................................... 144 274 304
Other operating expense.......................................... 1,898 1,535 2,004
------- ------ ------
Total other operating expense............................ 6,894 5,721 6,469
------- ------ ------
Income (loss) before federal income taxes.......................... (150) 251 1,691
Federal income tax expense (benefit) (Note 9)...................... (121) (82) 260
------- ------ ------
Net income (loss)........................................ $ (29) $333 $1,431
======= ====== ======
Net income (loss) per common share (Note 2)........................ $(.06) $ .70 $ 2.97
======= ====== ======
</TABLE>

See accompanying notes to consolidated financial statements.

F-29
<PAGE> 83

NORTH BANK CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION) MINIMUM
ON SECURITIES PENSION
COMMON RETAINED AVAILABLE FOR LIABILITY
STOCK SURPLUS EARNINGS SALE ADJUSTMENT TOTAL
------ ------- -------- -------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
BALANCE -- JANUARY 1, 1993.......... $1,223 $ 5,757 $2,949 $ 9,929
Net income, 1993.................... 1,431 1,431
Cash dividends ($.55 per share)..... (266) (266)
Retirement of shares................ (19) (128) (147)
Net unrealized appreciation on
securities available for sale..... $ 53 53
------ ------ ------ ------- -------
BALANCE -- DECEMBER 31, 1993........ 1,204 5,629 4,114 53 11,000
Net income, 1994.................... 333 333
Cash dividends ($.60 per share)..... (288) (288)
Net change in unrealized
appreciation (depreciation) on
securities available for sale..... (1,189) (1,189)
Minimum pension liability adjustment
(Note 11)......................... $ (333) (333)
------ ------ ------ ------- ----- -------
BALANCE -- DECEMBER 31, 1994........ 1,204 5,629 4,159 (1,136) (333) 9,523
Net loss, 1995...................... (29) (29)
Cash dividends ($.60 per share)..... (289) (289)
Exercise of options (Note 11)....... 3 6 9
Net change in unrealized
appreciation (depreciation) on
securities available for sale..... 1,099 1,099
Minimum pension liability adjustment
(Note 11)......................... 333 333
------ ------ ------ ------- ----- -------
BALANCE -- DECEMBER 31, 1995........ $1,207 $ 5,635 $3,841 $ (37) $ 0 $10,646
====== ====== ====== ======= ===== =======
</TABLE>

See accompanying notes to consolidated financial statements.

F-30
<PAGE> 84

NORTH BANK CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss).................................................... $ (29) $ 333 $ 1,431
Adjustments to reconcile net income (loss) to net cash from operating
activities:
Depreciation....................................................... 534 613 546
Net amortization................................................... 86 87 76
Provision for loan losses.......................................... 307 180 150
(Gain) loss on sales of other real estate.......................... (76) 5
Gain on sales of loans............................................. (424) (116) (441)
Origination of loans for sale...................................... (24,592) (6,120) (18,765)
Proceeds from sales of loans originated for sale................... 23,926 6,297 19,623
Gain on sale of mortgage servicing rights.......................... (124)
Net (gain) loss on sales of securities............................. 111 374 (1,201)
Change in assets and liabilities
Securities available for sale.................................... (2,169)
Deferred taxes................................................... (178) (109) 28
Accrued interest receivable...................................... (92) (92) 354
Accrued interest payable......................................... 20 59 (13)
Other assets..................................................... 639 (728) 292
Other liabilities................................................ (539) 224 (327)
-------- -------- --------
Net cash from operating activities............................ (431) 1,007 (416)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities available for sale................. 62,290 20,612
Proceeds from maturities, calls, and paydowns of securities available
for sale........................................................... 3,572
Purchase of securities available for sale............................ (55,974) (8,550)
Proceeds from sales of securities held to maturity................... 9,251
Proceeds from maturities of securities held to maturity.............. 2 3,594 600
Purchase of securities held to maturity.............................. (6,558) (17,980)
Loan originations net of principal payments on loans................. (7,905) (16,595) 7,177
Proceeds from sales of other real estate............................. 815 233
Proceeds from sale of mortgage servicing rights...................... 306
Premises and equipment expenditures.................................. (67) (137) (1,126)
-------- -------- --------
Net cash from investing activities................................. 3,039 (7,401) (2,078)
CASH FLOWS FROM FINANCING ACTIVITIES
Acquisition of deposits.............................................. 6,767
Net change in deposits............................................... 1,233 (360) (16,076)
Dividends............................................................ (289) (288) (266)
Proceeds from FHLB advances.......................................... 3,000 4,728 15,000
Repayment of FHLB advances........................................... (13,728)
Change in Federal funds purchased.................................... (1,100) 1,100
Exercise of stock options............................................ 9
Stock retired........................................................ (147)
-------- -------- --------
Net cash from financing activities............................ (4,108) 5,180 (1,489)
Net change in cash and cash equivalents................................ (1,500) (1,214) (3,983)
Cash and cash equivalents at beginning of year......................... 8,121 9,335 13,318
-------- -------- --------
Cash and cash equivalents at end of year............................... $ 6,621 $ 8,121 $ 9,335
======== ======== ========
Supplemental disclosures of cash flow information
Cash paid during the year for
Interest........................................................... $ 5,364 $ 3,871 $ 4,156
Income taxes....................................................... 35 645
Supplemental disclosures on noncash investing activities
Transfer from loans to other real estate............................. 289 25 542
Transfer of securities to available for sale upon adoption of SFAS
115................................................................ 40,753
Transfer of securities from held to maturity to available for sale
(Note 4)........................................................... 29,499
</TABLE>

See accompanying notes to consolidated financial statements.

F-31
<PAGE> 85

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994

NOTE 1 -- NATURE OF OPERATIONS

The consolidated financial statements include the accounts of North Bank
Corporation and its wholly-owned subsidiary, North Bank (the Bank), and the
Bank's wholly-owned subsidiary, First Central Mortgage Corporation, after
elimination of significant inter-company transactions and accounts.

On October 3, 1994, North Bank acquired First Central Mortgage Corporation,
a residential mortgage originating company headquartered in Saginaw, Michigan.
The acquisition was recorded under the purchase method. Intangible assets
acquired are being amortized over their estimated economic lives.

In October 1995, North Bank acquired a branch of First of America in
Hubbard Lake, Michigan. Deposits acquired were approximately $6.8 million.
Intangible assets associated with this acquisition are being amortized over
their estimated economic lives.

The Bank grants commercial, installment and residential loans to customers
primarily in Northeastern Michigan. Although the loan portfolio is diversified,
a substantial portion of its debtors' ability to honor their contracts is
dependent upon the tourism industry. Primarily all installment and residential
loans are secured by personal property and real estate. Approximately 96% of the
commercial loans are secured by business assets and the remaining 4% are largely
unsecured.

The Bank's revenues primarily arise from interest income from residential
mortgage lending activities, investments and revenue derived from mortgage
banking through origination of, and sales of mortgage loans to the secondary
market with servicing retained, and related servicing income. The Bank maintains
eleven branches within Iosco, Ogemaw, Alpena, Presque Isle, Alcona and
Montmorency counties of Michigan.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following summarize the significant accounting and reporting policies
used in the preparation of the consolidated financial statements:

Use of Estimates in Preparing Financial Statements: The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates. The primary estimates incorporated into the Corporation's financial
statements which are susceptible to change in the near term include the
allowance for loan losses, the determination and carrying value of impaired
loans, the determination and carrying value of intangibles, the determination
and carrying value of certain financial instruments and the realization of
deferred tax assets.

Securities: At December 31, 1993, the Corporation adopted Statement of
Financial Accounting Standards No. 115, Accounting for Certain Investments in
Debt and Equity Securities (SFAS No. 115). As required by SFAS No. 115,
securities classified as available for sale are reported at their fair value and
the related unrealized holding gain or loss is reported, net of related income
tax effects, as a separate component of shareholders' equity, until realized.
Securities available for sale consist of those securities not classified as held
to maturity. Such securities might be sold prior to maturity due to changes in
interest rates, prepayment risks, yield and availability of alternative
investments, liquidity needs or other factors. Securities for which management
has the positive intent and the Corporation has the ability to hold to maturity
are reported at amortized cost.

Premiums and discounts on securities are recognized in interest income
using the interest method over the period to maturity. Gains and losses on the
sale of securities available for sale are determined using the specific
identification method.

F-32
<PAGE> 86

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Loans and Interest and Fees on Loans: Loans are stated at their principal
amount outstanding. Interest on loans is accrued over the term of the loan based
upon the amount of the principal outstanding. The accrual of interest is
discontinued on a loan when management believes serious doubt exists as to the
collectibility of the loan principal or interest. Loan fees and certain direct
loan origination costs are deferred and amortized into interest income over the
term of the loans using the level yield method.

Allowance for Loan Losses: Because some loans may not be repaid in full, an
allowance for loan losses is recorded. Increases to the allowance are recorded
by a provision for possible loan losses charged to expense. Estimating the risk
of loss and the amount of loss on any loan is necessarily subjective.
Accordingly, the allowance is maintained by management at a level considered
adequate to cover possible losses that are currently anticipated based on past
loss experience, general economic conditions, information about specific
borrower situations including their financial position and collateral values,
and other factors and estimates which are subject to change over time. While
management may periodically allocate portions of the allowance for specific
problem loan situations, the whole allowance is available for any loan
charge-offs that occur. A loan is charged off by management as a loss when
deemed uncollectible, although collection efforts continue and further
recoveries may occur.

Statement of Financial Accounting Standards No. 114, Accounting by
Creditors for Impairment of a Loan (SFAS No. 114), as amended by SFAS No. 118,
was adopted by the Corporation on January 1, 1995. Under this Standard, loans
considered to be impaired are reduced to the present value of expected future
cash flows or to the fair value of collateral, by allocating a portion of the
allowance for loan losses to such loans. If these allocations cause the
allowance for loan losses to require an increase, such an increase is reported
as bad debt expense. The adoption of this Standard was immaterial to the 1995
consolidated financial statements.

The carrying values of impaired loans are periodically adjusted to reflect
cash payments, revised estimates of future cash flows, and increases in the
present value of expected cash flows due to the passage of time. Cash payments
representing interest income are reported as such. Other cash payments are
reported as reductions in the carrying value of the loan. Increases or decreases
due to changes in estimates of future payments and due to the passage of time
are reported within the provision for loan losses.

The Corporation has defined "impaired loans" as those loans for which it is
probable that all principal and interest due will not be repaid in accordance
with the original loan agreement. The Corporation has set minimum balance and
condition requirements before a loan may be considered to be impaired.

Loans Held for Sale: Mortgage loans originated and intended for sale in the
secondary market are carried at the lower of cost or market value in the
aggregate. Net unrealized losses are recognized in a valuation allowance by
adjustments to income.

Premises and Equipment: Premises and equipment are stated at cost less
accumulated depreciation and amortization. Depreciation and amortization are
provided primarily on the straight-line basis over the estimated useful lives of
the assets. Maintenance and repairs are expensed and major improvements are
capitalized. At the time of sales or disposition of an asset, the applicable
cost and accumulated depreciation amounts are removed from the books.

Other Real Estate: Other real estate includes properties acquired through,
or in lieu of, loan foreclosure and are initially recorded at fair value at the
date of foreclosure establishing a new cost basis. After foreclosure, valuations
are periodically performed by management and the real estate is carried at the
lower of carrying amount or fair value less costs to sell. Revenue and expenses
from operations and changes in the valuation allowance are included in loss on
other real estate.

F-33
<PAGE> 87

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- CONTINUED
Intangible Assets and Goodwill: The value of core deposits acquired in a
1995 branch acquisition are amortized on an accelerated method over their
expected lives. The excess of purchase price over the fair value of assets and
liabilities acquired (goodwill) is amortized on a straight-line basis over 12
years.

Income Taxes: In 1995, the Corporation retroactively adopted Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes (SFAS No.
109), by restating 1991 and subsequent years. The Corporation records income tax
expense based on the amount of taxes due on its tax return plus deferred taxes
computed based on the expected future tax consequences of temporary differences
between the carrying amounts and tax bases of assets and liabilities, using
enacted tax rates. As changes in tax laws or rates are enacted, deferred tax
assets and liabilities are adjusted through the provision for income taxes.

Net Income (Loss) Per Common Share: Net income (loss) per common share is
based on the weighted average common shares outstanding during the years
presented, retroactively adjusted for a two-for-one stock split effected
December 31, 1993. The stock split was recorded at par value. Beginning in 1994,
Employee Stock Ownership Plan shares are considered outstanding for net
income(loss) per share calculations as they are committed to be released;
unallocated shares are not considered outstanding. The weighted average number
of common shares used in the per share computations were 481,759 in 1995,
472,876 in 1994 and 482,532 in 1993.

Statement of Cash Flows: For purposes of this statement, cash and cash
equivalents include cash on hand, demand deposits in other institutions, federal
funds sold and short-term investments. The Corporation reports net cash flows
for customer loan and deposit transactions.

Impact of New Accounting Standards: The following new accounting standards
have been issued by the Financial Accounting Standards Board that will apply in
1996. Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets, requires a review of long-term assets for
impairment of recorded value and resulting write-downs if value is impaired.
Statement of Financial Accounting Standards No. 122, Accounting for Mortgage
Servicing Rights, requires recognition of an asset when servicing rights are
retained on in-house originated loans that are sold. Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation, requires
proforma disclosure of the effect on net income of valuing future option grants
at their estimated fair value. These Statements are not expected to have a
material effect on the Corporation's financial position or results of
operations.

Reclassification: Certain reclassifications have been made to prior period
consolidated financial statements to place them on a basis comparable with the
current year's consolidated financial statements.

NOTE 3 -- CASH AND DUE FROM BANKS

Included in cash and due from banks are amounts required to be deposited
with the Federal Reserve Bank. These reserve balances vary, depending on the
level of customer deposits in the Corporation's subsidiary bank. At December 31,
1995 and 1994, the Federal Reserve balances were $717,000 and $694,000,
respectively.

F-34
<PAGE> 88

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 4 -- SECURITIES

The amortized cost and fair value of securities are as follows at December
31, in thousands:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
<S> <C> <C> <C> <C>
AVAILABLE FOR SALE
1995
U.S. Government agencies............................ $20,660 $120 $ (9) $20,771
Obligations of states and political subdivisions.... 2,282 6 (16) 2,272
Mortgage-backed securities.......................... 24,786 54 (210) 24,630
Equity securities................................... 992 992
------- ---- ------- -------
$48,720 $180 $ (235) $48,665
======= ==== ======= =======
1994
U.S. Government agencies............................ $ 462 $ (3) $ 459
Mortgage-backed securities.......................... 26,769 (1,718) 25,051
Equity securities................................... 993 993
------- ------- -------
$28,224 $ (1,721) $26,503
======= ======= =======
HELD TO MATURITY
1994
U.S. Government agencies............................ $ 952 $ (7) $ 945
Obligations of states and political subdivisions.... 12,965 $ 65 (580) 12,450
Mortgage-backed securities.......................... 16,667 (1,307) 15,360
------- ---- ------- -------
$30,584 $ 65 $ (1,894) $28,755
======= ==== ======= =======
</TABLE>

Transfer of Securities from HTM to AFS: Effective in May 1995, the entire
portfolio of securities held to maturity were reclassified as securities
available for sale. The amount of securities transferred had a book value of
$30,249,000, a fair value of $29,499,000, and a net unrealized loss of $750,000
at the time of transfer. Management believes that classification of all
securities as available for sale will provide the Bank with greater flexibility
in managing the Bank's assets and liabilities.

The amortized cost and fair value of securities at December 31, 1995, by
contractual maturity, are shown below in thousands. Maturities may differ from
contractual maturities because borrowers may have the right to call or prepay
obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
AVAILABLE FOR SALE
--------------------
AMORTIZED FAIR
COST VALUE
--------- -------
<S> <C> <C>
Due in one year or less................................................... $ 1,243 $ 1,239
Due after 1 year through 5 years.......................................... 6,507 6,522
Due after 5 years through 10 years........................................ 15,192 15,282
Mortgage-backed securities................................................ 24,786 24,630
Equity securities......................................................... 992 992
------- -------
$48,720 $48,665
======= =======
</TABLE>

Because of their variable payments, mortgage-backed securities are not
reported by a specific maturity grouping.

F-35
<PAGE> 89

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 4 -- SECURITIES -- CONTINUED
Sales activities for the years ended December 31 were as follows, in
thousands:

<TABLE>
<CAPTION>
AVAILABLE FOR SALE HELD TO MATURITY
----------------------------- ----------------------------
1995 1994 1993 1995 1994 1993
------- ------- ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Sales proceeds......................... $62,290 $20,612 $78,981 $9,251
Gross gains............................ 334 104 980 411
Gross losses........................... 445 478 167 23
</TABLE>

At December 31, 1995, mortgage-backed securities with a carrying value of
approximately $11,995,000 were pledged to secure public deposits and advances
from the Federal Home Loan Bank (Note 10).

NOTE 5 -- LOANS

Total loans consist of the following at December 31, in thousands:

<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Commercial................................................................ $20,923 $17,349
Consumer.................................................................. 30,335 25,907
Real Estate............................................................... 39,073 38,577
------- -------
$90,331 $81,833
======= =======
</TABLE>

Loans held for sale totaled $1,115,000 and $25,000 at December 31, 1995 and
1994, respectively. Loans sold with servicing retained totaled $1,671,000 and
$32,088,000 at December 31, 1995 and 1994, respectively.

NOTE 6 -- ALLOWANCE FOR LOAN LOSSES

An analysis of activity in the allowance for loan losses for the years
ended December 31, follows in thousands:

<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Balance -- January 1................................................. $ 949 $ 902 $ 993
Provision charged to expense....................................... 307 180 150
Loans charged off.................................................. (386) (207) (348)
Recoveries......................................................... 118 74 107
----- ----- -----
Balance -- December 31............................................... $ 988 $ 949 $ 902
===== ===== =====
</TABLE>

Information regarding impaired loans is as follows for 1995:

<TABLE>
<S> <C>
Average investment in impaired loans................................. $ 319
Interest income recognized on impaired loans on cash basis........... 44
</TABLE>

Information regarding impaired loans at December 31, 1995 is as follows:

<TABLE>
<S> <C>
Total impaired loans................................................. $ 389
Less loans for which no allowance for loan losses is allocated....... (389)
-----
Impaired loans for which an allowance for loan losses is allocated... $ 0
=====
Portion of allowance allocated to these loans........................ $ 0
=====
</TABLE>

F-36
<PAGE> 90

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 6 -- ALLOWANCE FOR LOAN LOSSES -- CONTINUED
Nonperforming loans, including loans on nonaccrual and loans past due
greater than 90 days, totaled $1,014,000 at December 31, 1994.

NOTE 7 -- PREMISES AND EQUIPMENT

Premises and equipment by classification are as follows at December 31, in
thousands:

<TABLE>
<CAPTION>
1995 1994
------- -------
<S> <C> <C>
Land...................................................................... $ 640 $ 497
Buildings and improvements................................................ 4,507 4,712
Furniture and fixtures.................................................... 3,974 3,915
------- -------
9,121 9,124
Accumulated depreciation.................................................. (3,541) (3,077)
------- -------
$ 5,580 $ 6,047
======= =======
</TABLE>

NOTE 8 -- DEPOSITS

The aggregate amount of time certificates of deposit in denominations of
$100,000 or more approximated $2,980,000 and $3,567,000 as of December 31, 1995
and 1994, respectively.

At December 31, 1995, the maturity of certificates of deposits for each
year is as follows:

<TABLE>
<S> <C>
1996............................................................................... $39,023
1997............................................................................... 4,432
1998............................................................................... 3,992
1999............................................................................... 4,185
2000............................................................................... 3,783
Afterwards......................................................................... 176
-------
$55,591
=======
</TABLE>

NOTE 9 -- INCOME TAXES

The following are the components of the federal income tax expense
(benefit) for the years ended December 31, in thousands:

<TABLE>
<CAPTION>
1995 1994 1993
----- ---- ----
<S> <C> <C> <C>
Current expense........................................................ $ 57 $ 27 $232
Deferred expense (benefit)............................................. (112) (13) 28
Net operating loss benefit............................................. (66) (96)
----- ---- ----
$(121) $(82) $260
===== ==== ====
</TABLE>

F-37
<PAGE> 91

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 9 -- INCOME TAXES -- CONTINUED
The net deferred tax asset (liability) at December 31, 1995 and 1994 is
comprised of the following:

<TABLE>
<CAPTION>
1995 1994
----- ------
<S> <C> <C>
Deferred tax assets
Net unrealized depreciation on securities available for sale.............. $ 19 $ 585
Allowance for loan losses................................................. 154 140
Nonaccrual interest....................................................... 3 14
Pension................................................................... 100
AMT credit carry forward.................................................. 108 107
Net operating loss........................................................ 162 96
Other..................................................................... 32 36
----- ------
478 1,078
Deferred tax liabilities
Fixed assets.............................................................. (348) (223)
Purchase accounting adjustments........................................... (310) (477)
Pension................................................................... (17)
Other..................................................................... (45) (61)
----- ------
(720) (761)
----- ------
Net deferred tax asset (liability).......................................... $(242) $ 317
===== ======
</TABLE>

No valuation allowance has been provided on deferred tax assets.

The difference between the financial statement tax expense and amounts
computed by applying the federal statutory tax rate of 34% to pretax income is
reconciled as follows:

<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -----
<S> <C> <C> <C>
Statutory rate applied to income (loss) before federal income
taxes.............................................................. $ (51) $ 85 $ 575
Add (Deduct)
Effect of tax exempt interest...................................... (125) (210) (299)
Effect of disallowed interest expense.............................. 19 27 31
Other.............................................................. 36 16 (47)
----- ----- -----
$(121) $ (82) $ 260
===== ===== =====
</TABLE>

A tax operating loss carryforward in the amount of $96,000 expires in 2009.
The remaining $66,000 in carryforward expires in 2010.

F-38
<PAGE> 92

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 10 -- LONG TERM BORROWINGS

Included in long-term borrowings on the consolidated balance sheets are
advances from the Federal Home Loan Bank (FHLB) which consist of the following
at December 31, in thousands:

<TABLE>
<CAPTION>
RATE AT
DECEMBER 31,1995 MATURITY 1995 1994
----------------- ------------------ ------ -------
<S> <C> <C> <C> <C>
Adjustable Rate Advances:
November 10, 1999 $ 5,000
5.908% July 15, 1998 $9,000 10,000
Fixed Rate Advances:
August 15, 2003 2,364
December 15, 2003 2,364
------ -------
$9,000 $19,728
====== =======
</TABLE>

The adjustable rate advances are priced at the three-month LIBOR rate less
three basis points. The advances are secured by approximately $11,495,000 in
securities as of December 31, 1995. Interest is payable in monthly installments
through the date of maturity. Prepayments on the adjustable rate advances up to
10% of the principal balance will be accepted by the FHLB given the
Corporation's notification to the FHLB of their intent to prepay.

NOTE 11 -- EMPLOYEE BENEFIT PLANS

The Corporation maintains an Employee Stock Ownership Plan (ESOP), which
invests primarily in stock of North Bank Corporation. The ESOP is a stock bonus
and defined contribution plan covering substantially all full-time employees
ages 21 or older, having completed one full year of service. In accordance with
the terms of the ESOP, employees may make voluntary contributions to the Plan of
up to 10 percent of eligible compensation, subject to certain limitations. The
Corporation will match employee contributions equal to the greater of 50% of the
first 6% of compensation deferred by the participant or a discretionary amount
determined by the employer. The Corporation may also make a supplemental
matching contribution to the Plan in an amount determined by the employer. The
Corporation's contributions for 1995 and 1994 were $62,000 and $49,000,
respectively. At December 31, 1995, 48,114 shares were allocated to individual
participants under the plan.

The ESOP had a loan from a commercial bank which was paid off during 1995.
Accordingly, the Corporation had guaranteed the ESOP's debt. As loan payments
were made, unallocated shares were released and allocated to plan participants.
The ESOP's repayments of the debt were made from the contributions and dividends
on stock it received from the Corporation.

The Corporation has a stock option plan, adopted by shareholders in 1993,
which provides for the grant of a maximum of 20,000 shares of the Corporation's
common stock to certain officers and employees at a price which is not less than
the fair market value of the stock at the time the options are granted. The
options

F-39
<PAGE> 93

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 11 -- EMPLOYEE BENEFIT PLANS -- CONTINUED
granted are exercisable immediately and expire five years after the date of the
grant. No options were granted in 1993. Activity in the plan was as follows:

<TABLE>
<CAPTION>
SHARES
OPTION SUBJECT TO
PRICE OPTION
------ ----------
<S> <C> <C>
Options granted in 1994................................................... $16.25 3,039
Options expired......................................................... 16.25 (218)
-----
Outstanding December 31, 1994............................................. 2,821
Options granted......................................................... 16.45 3,412
Options expired......................................................... 16.25 (262)
Options expired......................................................... 16.45 (255)
Options exercised....................................................... 16.25 (283)
Options exercised....................................................... 16.45 (279)
-----
Outstanding December 31, 1995............................................. 5,154
Exercisable at December 31, 1995.......................................... 16.25 2,276
-----
16.45 2,878
-----
5,154
=====
</TABLE>

Nonqualified stock options were granted to an officer of the Corporation
during 1993. The options cover 4,000 shares of common stock at the price of
$15.13 and expire in 1998. At December 31, 1995, the options had not been
exercised.

The Corporation sponsored a non-contributory, defined benefit pension plan
covering substantially all employees. On December 31, 1994, the Corporation
curtailed the defined benefit pension plan, which resulted in the freezing of
benefits as of that date. The net loss due to the plan curtailment was $72,230
for 1994. During December 1995, the Corporation terminated the plan and settled
$1,103,000 of the accumulated benefit obligation by making cash payments to plan
participants and purchasing nonparticipating annuity contracts. The remaining
accumulated benefit obligation is expected to be settled by April 1996. Defined
benefits were not provided under any successor plan. The net loss due to the
plan settlement was $773,910 for 1995.

The following sets forth the plan's funded status and amounts recognized in
the consolidated balance sheets at December 31, in thousands:

<TABLE>
<CAPTION>
1995 1994
---- -------
<S> <C> <C>
Actuarial present value of vested accumulated benefit obligation............ $(88) $(1,098)
Plan assets at fair value................................................... 178 802
---- -------
Excess (deficiency) of plan assets over (under) accumulated benefit
obligation............................................................. 90 (296)
Unrecognized net loss....................................................... 536
Unrecognized transition asset............................................... (33)
Adjustment required to recognize minimum liability.......................... (503)
---- -------
Net pension assets (liabilities).......................................... $ 90 $ (296)
==== =======
</TABLE>

F-40
<PAGE> 94

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 11 -- EMPLOYEE BENEFIT PLANS -- CONTINUED
Net pension cost included in operations, including the effects of
curtailment and settlement, consisted of the following components:

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- -------
<S> <C> <C> <C>
Service cost-benefits earned.......................................... $ 88 $ 80
Interest cost on projected benefit obligation......................... $ 75 80 79
Expected return on plan assets........................................ (92) (76) (71)
Net amortization and deferral......................................... (1) 34 34
Net loss due to curtailment........................................... 72
Net loss due to settlement............................................ 774
---- ---- -------
Net periodic pension cost........................................... $756 $198 $ 122
==== ==== =======
</TABLE>

In accordance with the provisions of Statement of Financial Accounting
Standards No. 87, the Corporation recorded an additional minimum pension
liability adjustment in 1994 representing the excess of the accumulated benefit
obligation over the fair value of plan assets plus the amount recognized as
prepaid pension costs. The additional minimum pension liability was included in
"Other liabilities". This transaction, which had no impact on earnings, resulted
in a reduction of shareholders' equity in 1994 of $332,640, net of tax.

A weighted average discount rate of 7% was used in determining the
actuarial present value of the accumulated benefit obligation in 1995 and 1994.
The expected long-term rate of return on plan assets was 9% in both years.

NOTE 12 -- RELATED PARTY TRANSACTIONS

The Corporation enters into transactions with certain executive officers,
directors, and their related interests. Included in these transactions are loans
which amounted to approximately $130,000 and $309,000 at December 31, 1995 and
1994, respectively. Deposit accounts with the same individuals amounted to
$549,324 and $492,863 at December 31, 1995 and 1994, respectively.

NOTE 13 -- COMMITMENTS AND CONTINGENCIES

From time to time, the Corporation is involved in legal matters in the
ordinary course of business. Management believes that the ultimate resolution of
such matters will not have a material effect on the consolidated financial
statements.

The Bank is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet financing needs of its customers. These
financial instruments include commitments to make loans and unused lines of
credit. The Bank follows the same credit policy to make such commitments as is
followed for loans and investments recorded in the consolidated financial
statements.

As of December 31, 1995, the Bank has outstanding commitments to make loans
of which 67% are at fixed rates. These interest rates range from 8.25% to 9.75%.
The Bank also funds unused lines of credit of which 26% are at fixed rates. The
fixed interest rates on the line of credits range from 6.20% to 11.75%.

Outstanding commitments at December 31 were as follows:

<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
To make loans........................................................ $ 341,000 $ 201,000
To fund lines of credit.............................................. 7,152,000 3,091,000
To extend letters of credit.......................................... 75,000 68,000
</TABLE>

F-41
<PAGE> 95

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 14 -- NORTH BANK CORPORATION (PARENT COMPANY ONLY) CONDENSED FINANCIAL
INFORMATION (IN THOUSANDS)

Presented below are condensed financial statements for the parent company:

CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
1995 1994
------- ------
<S> <C> <C>
Assets
Cash.................................................................. $ 34 $ 37
Investment in subsidiary.............................................. 10,545 9,415
Other assets.......................................................... 67 71
-------- ------
$10,646 $9,523
======== ======
Shareholders' equity.................................................... $10,646 $9,523
======== ======
</TABLE>

CONDENSED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ------
<S> <C> <C> <C>
Dividends from subsidiary......................................... $289 $317 $ 578
Operating expenses................................................ 20 73 64
---- ---- ------
Income before federal income tax and equity in undistributed
or excess distributed earnings or loss of subsidiary........ 269 244 514
Federal income tax benefit........................................ 4 25 20
---- ---- ------
Income before equity in undistributed or excess distributed
earnings or loss of subsidiary.............................. 273 269 534
Equity in undistributed or excess distributed earnings or loss of
subsidiary...................................................... (302) 64 897
---- ---- ------
Net income................................................... $(29) $333 $1,431
==== ==== ======
</TABLE>

F-42
<PAGE> 96

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 14 -- NORTH BANK CORPORATION (PARENT COMPANY ONLY) CONDENSED FINANCIAL
INFORMATION (IN THOUSANDS) -- CONTINUED
CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
1995 1994 1993
----- ----- -------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss).......................................... $ (29) $ 333 $ 1,431
Adjustments to reconcile net income to net cash from
operating activities
Equity in subsidiary's net (income)loss................. 13 (381) (1,475)
Increase (decrease) in other assets..................... 4 (13) (8)
----- ----- -------
Net cash from operating activities................. (12) (61) (52)
CASH FLOW FROM INVESTING ACTIVITIES
Increase (decrease) in advances to subsidiary.............. (45)
Dividends from subsidiary.................................. 289 317 578
----- ----- -------
Net cash from investing activities................. 289 317 533
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid to shareholders............................. (289) (288) (265)
Issuance of common stock................................... 9
Repurchases of common stock................................ (147)
----- ----- -------
Net cash from financing activities................. (280) (288) (412)
Net increase in cash and cash equivalents.................... (3) (32) 69
Cash at beginning of period................................ 37 69
----- ----- -------
Cash at end of year................................ $ 34 $ 37 $ 69
===== ===== =======
</TABLE>

NOTE 15 -- DISCLOSURES REGARDING FAIR VALUE OF FINANCIAL INSTRUMENTS (IN
THOUSANDS)

The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:

Cash and Short-Term Investments: For these short-term instruments, the
carrying amount is a reasonable estimate of fair value.

Securities: For securities, fair value is based upon market price quotes
from brokers utilizing pricing formulas.

Loans: The fair value of loans is estimated by discounting future cash
flows using the current rates at which similar loans would be made to borrowers
with similar credit ratings and for the same remaining maturities.

Deposit Liabilities: The fair value of demand deposits, savings accounts,
and certain money market deposits is the amount payable on demand at the
reporting date. The fair value of fixed-maturity certificates of deposit is
estimated by discounting future cash flows using the rates currently offered for
deposits of similar remaining maturities.

Long-Term Borrowings: The fair value of FHLB advances is estimated by
discounting future cash flows using rates currently offered for similar terms.

Accrued Interest Receivable/Payable: For these items, the carrying amount
is a reasonable estimate of fair value.

F-43
<PAGE> 97

NORTH BANK CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 15 -- DISCLOSURES REGARDING FAIR VALUE OF FINANCIAL INSTRUMENTS (IN
THOUSANDS) -- CONTINUED
Commitments to Extend Credit and Standby Letters of Credit: The fair value
of commitments is estimated using the fees currently charged to enter similar
agreements, taking into account the remaining terms of the agreements and the
present creditworthiness of the counterparties. For fixed-rate loan commitments,
fair value also considers the difference between current levels of interest
rates and the committed rates. The fair value of letters of credit is based on
fees currently charged for similar agreements or on the estimated costs to
terminate them or otherwise settle the obligations with the counterparties at
the reporting date. The fair values associated with these financial instruments
are immaterial at December 31, 1995 and 1994.

The estimated fair values of the Corporation's financial instruments are as
follows:

<TABLE>
<CAPTION>
1995 1995
-------------------- --------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Financial assets
Cash and short-term investments................... $ 6,621 $ 6,621 $ 8,121 $ 8,121
Securities........................................ 48,665 48,665 57,087 55,257
Loans............................................. 90,331 90,159 81,833 80,308
Less: allowance for loan loss..................... (988) (988) (949) (949)
Accrued interest receivable....................... 1,102 1,102 1,010 1,010
Financial liabilities
Deposits.......................................... 131,765 132,267 123,765 124,121
Borrowings........................................ 9,000 9,000 20,828 20,328
Accrued interest payable.......................... 516 516 496 496
</TABLE>

NOTE 16 -- RESTRICTIONS ON SUBSIDIARY DIVIDENDS

Banking laws and regulations restrict the amount the Bank can transfer to
the Corporation in the form of cash dividends. At December 31, 1995, $3.6
million of retained earnings of the Bank was available for distribution to the
Corporation as dividends without prior regulatory approval. It is not the intent
of management to pay dividends in amounts which would reduce the capital of the
Bank to a level below that which is considered prudent by management and in
accordance with the guidelines of regulatory authorities.

NOTE 17 -- PENDING MERGER

In February 1996, the Corporation entered into a definitive agreement to be
acquired by Independent Bank Corporation of Ionia, Michigan (a publicly-traded
corporation). The purchase price is estimated to be $33 per share of North Bank
Corporation common stock. The acquisition is subject to both regulatory and
shareholder approval and is expected to be completed during the second quarter
of 1996.

F-44
<PAGE> 98

------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary...................... 3
Risk Factors............................ 7
Recent Developments..................... 9
Use of Proceeds......................... 10
Market for the Depositary Shares........ 10
Price Range of Common Stock and
Dividends............................. 11
Capitalization.......................... 12
Selected Consolidated Financial Data.... 13
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 14
Business................................ 29
Supervision and Regulation.............. 34
Description of Depositary Shares........ 41
Description of Capital Stock............ 44
Underwriting............................ 50
Legal Matters........................... 50
Experts................................. 50
Available Information................... 51
Incorporation of Certain Documents by
Reference............................. 51
Index to Consolidated Financial
Statements............................ F-1
</TABLE>

------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.

------------------------------------------------------

600,000 SHARES

INDEPENDENT BANK LOGO

DEPOSITARY SHARES
EACH REPRESENTING A
1/4 INTEREST IN A SHARE OF
% CUMULATIVE, CONVERTIBLE
PREFERRED STOCK, SERIES A

------------------------

Prospectus
, 1996
------------------------

STIFEL, NICOLAUS & COMPANY
INCORPORATED

------------------------------------------------------
<PAGE> 99

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Expenses in connection with the issuance and distribution of the securities
being registered are estimated as follows, all of which are to be borne by the
Company:

<TABLE>
<S> <C>
SEC Registration Fee............................................... $5,227.27
NASDAQ Fee......................................................... *
Printing and Engraving Expenses.................................... *
Accounting Fees.................................................... *
Transfer and Registrar's Fees...................................... *
Legal Fees and Expenses............................................ *
Blue Sky Qualification Fees and Expenses........................... *
Miscellaneous...................................................... *
--------
Total.........................................................
========
</TABLE>

- -------------------------
* To be completed by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Articles of Incorporation of the Company provide that its directors and
officers are to be indemnified as of right to the fullest extent permitted under
the Michigan Business Corporation Act ("MBCA"). Under the MBCA, directors,
officers, employees or agents are entitled to indemnification against expenses
(including attorneys' fees) whenever they successfully defend legal proceedings
brought against them by reason of the fact that they hold such a position with
the corporation. In addition, with respect to actions not brought by or in the
right of the corporation, indemnification is permitted under the MBCA for
expenses (including attorneys' fees), judgments, fines, penalties and reasonable
settlement if it is determined that the person seeking indemnification acted in
a good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation or its shareholders and, with
respect to criminal proceedings, he or she had no reasonable cause to believe
that his or her conduct was unlawful. With respect to actions brought by or in
the right of the corporation, indemnification is permitted under the MBCA for
expenses (including attorneys' fees) and reasonable settlements, if it is
determined that the person seeking indemnification acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation or its shareholders; provided, indemnification is
not permitted if the person is found liable to the corporation, unless the court
in which the action or suit was brought has determined that indemnification is
fair and reasonable in view of all the circumstances of the case.

The MBCA specifically provides that it is not the exclusive source of
indemnity. As a result, the Company adopted individual indemnification
agreements with its directors. Approved by the Company's shareholders, the
indemnification agreements provide a contractually enforceable right for prompt
indemnification, except that indemnification is not required where: (i)
indemnification is provided under an insurance policy, except for amounts in
excess of insurance coverage; (ii) indemnification is provided by the Company
outside of the agreement; (iii) the claim involved a violation of Section 16(b)
of the Securities Exchange Act of 1934 or similar provision of state law; or
(iv) indemnification by the Company is otherwise prohibited by law. In the case
of a derivative or other action by or in the right of the Company where a
director is found liable, indemnity is predicated on the determination that
indemnification is nevertheless appropriate, by majority vote of a committee of
disinterested directors, independent legal counsel, or a court where the claim
is litigated, whichever the indemnitee chooses. The protection provided by the
indemnification agreements is broader than that under the MBCA, where
indemnification in such circumstances is available only where specifically
authorized by the court where the claim is litigated.

II-1
<PAGE> 100

In addition to the available indemnification, the Company's Articles of
Incorporation, as amended, limit the personal liability of the members of its
Board of Directors for monetary damages with respect to claims by the Company or
its shareholders resulting from certain negligent acts or omissions.

Under an insurance policy maintained by the Company, the directors and
officers of the Company are insured within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of certain claims, actions, suits or proceedings, and certain
liabilities which might be imposed as a result of such claims, action, suits or
proceedings, which may be brought against them by reason of being or having been
such directors and officers.

The Company has agreed to indemnify the Underwriter, and the Underwriter
has agreed to indemnify the Company against certain civil liabilities, including
liabilities under the Securities Act of 1933, as amended. Reference is made to
the Underwriting Agreement filed as Exhibit 1 herewith.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

Reference is made to the Exhibit Index which appears at page II-4 of the
Registration Statement.

ITEM 17. UNDERTAKINGS.

Insofar as indemnification for liabilities under the Securities Act of
1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the Company pursuant of the foregoing provisions, or
otherwise, the Company has been advised that, in the opinion of the Securities
and Exchange Commission such indemnification is against the public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Company in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

The undersigned Company hereby undertakes that: (1) For purposes of
determining any liability under the Act, the information omitted from the form
of prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Company pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this Registration Statement as of the time it was declared effective; and (2)
For the purpose of determining any liability under the Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

II-2
<PAGE> 101

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Ionia, State of Michigan on October 18, 1996.

INDEPENDENT BANK CORPORATION

/s/ CHARLES C. VAN LOAN
--------------------------------------
Charles C. Van Loan, Principal
Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Charles C. Van Loan and William R. Kohls, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or his substitute may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE POSITION DATE
- ------------------------------------- ------------------------------------ ----------------
<C> <S> <C>
/s/ CHARLES C. VAN LOAN Principal Executive Officer and October 18, 1996
- ------------------------------------- Director
Charles C. Van Loan
/s/ WILLIAM R. KOHLS Principal Financial Officer October 18, 1996
- -------------------------------------
William R. Kohls
/s/ JAMES J. TWAROZYNSKI Principal Accounting Officer October 18, 1996
- -------------------------------------
James J. Twarozynski
/s/ WILLIAM F. EHINGER Director October 18, 1996
- -------------------------------------
William F. Ehinger
/s/ KEITH E. BAZAIRE Director October 18, 1996
- -------------------------------------
Keith E. Bazaire
/s/ TERRY L. HASKE Director October 18, 1996
- -------------------------------------
Terry L. Haske
/s/ THOMAS F. KOHN Director October 18, 1996
- -------------------------------------
Thomas F. Kohn
/s/ ROBERT J. LEPPINK Director October 18, 1996
- -------------------------------------
Robert J. Leppink
/s/ REX P. O'CONNOR Director October 18, 1996
- -------------------------------------
Rex P. O'Connor
/s/ ARCH V. WRIGHT, JR. Director October 18, 1996
- -------------------------------------
Arch V. Wright, Jr.
/s/ CHARLES A. PALMER Director October 18, 1996
- -------------------------------------
Charles A. Palmer
</TABLE>

II-3
<PAGE> 102

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NUMBER AND DESCRIPTION
-------------------------------------------------------------------------------
<S> <C> <C>
1 Form of Underwriting Agreement
4.1 Certificate of Designation of the % Cumulative, Convertible Preferred Stock,
Series A
4.2 Form of Depositary Receipt (attached as Exhibit A) to Deposit Agreement, filed
as Exhibit 4.3 hereto
4.3 Form of Deposit Agreement by and between the Company and State Street Bank &
Trust Company
5* Opinion of Varnum, Riddering, Schmidt & Howlett LLP as to the validity of the
issuance of the securities being registered
10(A) Deferred Benefit Plan for Directors (incorporated hereby by reference to
Exhibit 10(C) to the Company's report on Form 10-K for the year ended December
31, 1984)
10(B) The form of Indemnity Agreement approved by the Company's shareholders at its
April 19, 1988 Annual Meeting, as executed with all of the Directors of the
Company (incorporated herein by reference to Exhibit 10(F) to the Company's
report on Form 10-K for the year ended December 31, 1988)
10(C) Incentive Share Grant Plan, as amended, approved by the Company's shareholders
at its April 21, 1992 Annual Meeting (incorporated herein by reference to
Exhibit 10 to the Company's report on Form 10-K for the year ended December 31,
1992)
10(D) Nonemployee Director Stock Option Plan, approved by the Company's shareholders
at its April 21, 1992 Annual Meeting (incorporated herein by reference to
Exhibit 28 to the Company's Form S-8 Registration Statement, dated April 23,
1993, filed under Registration No. 33-62086)
10(E) Employee Stock Option Plan, approved by the Company's shareholders at its April
21, 1992 Annual Meeting (incorporated herein by reference to Exhibit 28 to the
Company's Form S-8 Registration Statement, dated April 30, 1993, filed under
Registration No. 33-62090)
10(F) Agreement and Plan of Reorganization among the Company, IBC Interim Co., and
North Bank Corporation, dated February 2, 1996 (incorporated by reference to
Exhibit 2.1 to the Company's Current Report on 8-K filed June 16, 1996)
10(G) Agreement to Purchase Assets and Assume Liabilities By and Between the Company
and First of America Bank-Michigan, National Association, dated September 18,
1996
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors
23.2 Consent of Crowe, Chizek and Company LLP, Independent Auditors
23.3* Consent of Varnum, Riddering, Schmidt & Howlett LLP (to be included in their
opinion filed herewith as Exhibit 5)
24 Power of Attorney (included on the signature page)
</TABLE>

- -------------------------
* To be filed by amendment

II-4

<PAGE> 1

EXHIBIT 1

600,000 Depositary Shares

INDEPENDENT BANK CORPORATION

Depositary Shares Each Representing a 1/4 Interest in a Share of
___% Cumulative, Convertible Preferred Stock, Series A
(Liquidation Preference of $25 per Depositary Share)

UNDERWRITING AGREEMENT

November __, 1996

STIFEL, NICOLAUS & COMPANY, INCORPORATED
500 North Broadway
St. Louis, Missouri 63102

Dear Sirs:

Independent Bank Corporation, a Michigan corporation (the
"Company"), proposes to issue and sell to Stifel, Nicolaus & Company,
Incorporated (the "Underwriter"), pursuant to the terms of this Agreement,
600,000 depositary shares with a liquidation preference of $25.00 per
depositary share, each representing a 1/4 interest (the "Depositary Shares") in
a share of the Company's ____% Cumulative, Convertible Preferred Stock, Series
A, no par value (the "Preferred Stock") to be issued under a Certificate of
Designations (the "Certificate of Designations"), the terms of which are more
fully described in the Prospectus (as hereinafter defined). The 600,000
Depositary Shares to be sold by the Company are herein called the "Firm
Shares." Solely for the purpose of covering over-allotments in the sale of the
Firm Shares, the Company further proposes to issue and sell to the Underwriter,
at their option, up to an additional 90,000 Depositary Shares (the "Option
Shares") upon exercise of the over-allotment option granted in Section 1
hereof. The Firm Shares and any Option Shares are herein collectively referred
to as the "Shares."

The Company hereby confirms as follows its agreement with the
Underwriter in connection with the proposed purchase of the Shares.

1. SALE, PURCHASE AND DELIVERY OF SHARES. On the
basis of the representations, warranties and agreements herein contained, and
subject to the terms and conditions herein set forth, the Company hereby agrees
to sell to the Underwriter and the Underwriter agrees to purchase from the
Company, at a purchase price per share of $____ (the "Purchase Price") the Firm
Shares.

In addition, on the basis of the representations, warranties and
<PAGE> 2

agreements herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants to the Underwriter, an option to purchase all
or any portion of the 90,000 Option Shares, and upon the exercise of such
option in accordance with this Section 1, the Company hereby agrees to sell to
the Underwriter, and the Underwriter agrees to purchase from the Company, all
or any portion of the Option Shares at the same Purchase Price per share paid
for the Firm Shares. The option hereby granted (the "Option") shall expire 30
days after the date upon which the Registration Statement (as hereinafter
defined) becomes effective and may be exercised only for the purpose of
covering over-allotments which may be made in connection with the offering and
distribution of the Firm Shares. The Option may be exercised in whole or in
part at any time (but not more than once) by you giving notice (confirmed in
writing) to the Company setting forth the number of Option Shares as to which
the Underwriter is exercising the Option and the time, date and place for
payment and delivery of certificates for such Option Shares. Such time and
date of payment and delivery for the Option Shares (the "Option Closing Date")
shall be determined by you, but shall not be earlier than two nor later than
five full business days after the exercise of such Option, nor in any event
prior to the Closing Date (as hereinafter defined). The Option Closing Date
may be the same as the Closing Date.

Payment of the Purchase Price and delivery of certificates for
the Firm Shares shall be made at the offices of the Underwriter, 500 North
Broadway, St. Louis, Missouri 63102, or such other place as shall be agreed to
by you and the Company, at 10:00 a.m., St. Louis time, on _____ __, 1996, or at
such other time not more than five full business days thereafter as the Company
and you shall determine (the "Closing Date"). If the Underwriter exercises the
option to purchase any or all of the Option Shares, payment of the Purchase
Price and delivery of certificates for such Option Shares shall be made on the
Option Closing Date at the offices of the Underwriter, or at such other place
as the Company and you shall determine. Such payments shall be made to the
Company or its order by wire transfer or certified or bank cashier's check, in
clearing house or similar immediately available funds, in the amount of the
Purchase Price therefor, against delivery by or on behalf of the Company to you
for the Underwriter of certificates for the Shares to be purchased by the
Underwriter.

The Agreement contained herein with respect to the timing of
the Closing Date and Option Closing Date is intended to, and does, constitute
an express agreement, as described in Rule 15c6-1(c) and (d) promulgated under
the 1934 Act (as defined herein), for a settlement date other than four
business days after the date of the contract.

Certificates for Shares to be purchased by the Underwriter
shall be delivered in fully registered form in such authorized denominations
and registered in such names as you shall request not later than 12:00 noon,
St. Louis time, two

<PAGE> 3

business days prior to the Closing Date and, if applicable, the Option Closing
Date. Certificates for Shares to be purchased by the Underwriter shall be made
available to you for inspection, checking and packaging at such office as you
may designate not later than 1:00 p.m., St. Louis time, on the last business
day prior to the Closing Date and, if applicable, on the last business day
prior to the Option Closing Date.

Time shall be of the essence, and delivery of the certificates
for the Shares at the time and place specified pursuant to this Agreement is a
further condition of the obligations of the Underwriter hereunder.

2. REPRESENTATIONS AND WARRANTIES.

(a) The Company represents and warrants to, and agrees
with, the Underwriter that:

(i) The reports filed with the Securities and
Exchange Commission (the "Commission") by the Company under the
Securities Exchange Act of 1934, as amended (the "1934 Act") and the
rules and regulations thereunder (the "1934 Act Regulations") at the
time they were filed with the Commission, complied as to form in all
material respects with the requirements of the 1934 Act and the 1934
Act Regulations and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.

(ii) The Company has prepared and filed with the
Commission a registration statement on Form S-2 (File No. 33-_______)
for the registration of the Shares under the Securities Act of 1933,
as amended (the "1933 Act"), including the related prospectus subject
to completion, and one or more amendments to such registration
statement may have been so filed, in each case in conformity in all
material respects with the requirements of the 1933 Act and the rules
and regulations promulgated thereunder (the "1933 Act Regulations").
Copies of such registration statement, including any amendments
thereto, each Preliminary Prospectus (as defined herein) contained
therein and the exhibits, financial statements and schedules to such
registration statement, as finally amended and revised, have
heretofore been delivered by the Company to the Underwriter. After
the execution of this Agreement, the Company will file with the
Commission (A) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the
1933 Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment
shall have been

3
<PAGE> 4

filed, in such registration statement), with such changes or
insertions as are required by Rule 430A of the 1933 Act Regulations
("Rule 430A") or permitted by Rule 424(b) of the 1933 Act Regulations
("Rule 424(b)") and as have been provided to and not objected to by
the Underwriter prior to (or as are agreed to by the Underwriter
subsequent to) the execution of this Agreement, or (B) if such
registration statement, as it may have been amended, has not been
declared by the Commission to be effective under the 1933 Act, an
amendment to such registration statement, including a form of final
prospectus, necessary to permit such registration statement to become
effective, a copy of which amendment has been furnished to and not
objected to by the Underwriter prior to (or is agreed to by the
Underwriter subsequent to) the execution of this Agreement. The
Company will not file any amendment to the registration statement or
any amended Preliminary Prospectus or any amendment thereto, of which
you have not been previously furnished a copy or to which you or your
counsel shall reasonably object. As used in this Agreement, the term
"Registration Statement" means such registration statement, as amended
at the time when it was or is declared effective under the 1933 Act,
including (1) all financial schedules and exhibits thereto (2) all
documents (or portions thereof) incorporated by reference therein
filed under the 1934 Act, and (3) any information omitted therefrom
pursuant to Rule 430A and included in the Prospectus (as hereinafter
defined); the term "Preliminary Prospectus" means each prospectus
subject to completion filed with such registration statement or any
amendment thereto including all documents (or portions thereof)
incorporated by reference therein under the 1934 Act (including the
prospectus subject to completion, if any, included in the Registration
Statement and each prospectus filed pursuant to Rule 424(a) under the
1933 Act); and the term "Prospectus" means the prospectus first filed
with the Commission pursuant to Rule 424(b)(1) or (4) or, if no
prospectus is required to be filed pursuant to Rule 424(b)(1) or (4),
the prospectus included in the Registration Statement, in each case
including the financial schedules and all documents (or portions
thereof) incorporated by reference therein under the 1934 Act. The
date on which the Registration Statement becomes effective is
hereinafter referred to as the "Effective Date."

(iii) The documents incorporated by reference in
the Preliminary Prospectus or Prospectus or from which information is
so incorporated by reference, when they become effective or were filed
with the Commission, as the case may be, complied in all material
respects with the requirements of the 1934 Act and the 1934 Act
Regulations, and when read together and with the other information in
the Preliminary Prospectus or Prospectus, as the case may be, at the
time the Registration Statement became or becomes effective and at the
Closing Date and any Option Closing Date, did not or will not, as the
case may be, contain an untrue

4
<PAGE> 5

statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.

(iv) No order preventing or suspending the use of
any Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) has been issued by the Commission, nor
has the Commission, to the knowledge of the Company, threatened to
issue such an order or instituted proceedings for that purpose. Each
Preliminary Prospectus, at the time of filing thereof, (A) complied in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and (B) did not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by you expressly for
inclusion in the Prospectus beneath the heading "Underwriting" (such
information referred to herein as the "Underwriter's Information").

(v) At the Effective Date and at all times
subsequent thereto, up to and including the Closing Date and, if
applicable, the Option Closing Date, the Registration Statement and
any post-effective amendment thereto (A) complied and will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations and (B) did not and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, not
misleading. At the Effective Date and at all times when the
Prospectus is required to be delivered in connection with offers and
sales of Shares, including, without limitation, the Closing Date and,
if applicable, the Option Closing Date, the Prospectus, as amended or
supplemented, (A) complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and
(B) did not contain and will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty does not apply to
Underwriter's Information.

(vi) The Company is duly organized, validly
existing and in good standing under the laws of the State of Michigan,
with full corporate and other power and authority to own, lease and
operate its properties and conduct its business as described in and
contemplated by the Registration

5
<PAGE> 6

Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and as currently
being conducted and is duly registered as a bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHC Act").

(vii) The Company has four subsidiaries. They are
Independent Bank, Independent Bank West Michigan, Independent Bank
South Michigan and Independent Bank East Michigan (the "Banks"). The
Company does not own or control, directly or indirectly, more than 5%
of any class of equity security of any corporation, association or
other entity other than the Banks, Independent Title Services, Inc.
and IBC Financial Services, Inc. Each of the Banks is a Michigan
State Bank duly incorporated, validly existing and in good standing
under the laws of Michigan. Each Bank has full corporate and other
power and authority to own, lease and operate its properties and to
conduct its business as described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and as
currently being conducted. Each Bank is a member of the Federal
Reserve System, and no proceedings for the termination or revocation
of such membership are pending or, to the knowledge of the Company,
threatened. The deposit accounts of each Bank are insured by the Bank
Insurance Fund administered by the Federal Deposit Insurance
Corporation (the "FDIC") up to the maximum amount provided by law,
except to the extent the Prospectus discloses such deposit accounts
are insured by the Savings Association Insurance Fund administered by
the FDIC ("SAIF") and to such extent the deposit accounts are so
insured up to the maximum amount provided by law; and no proceedings
for the modification, termination or revocation of any such insurance
are pending or, to the knowledge of the Company, threatened.

(viii) Each of the Company and the Banks is duly
qualified to transact business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns or leases
property or conducts its business so as to require such qualification
and in which the failure to so qualify would, individually or in the
aggregate, have a material adverse effect on the condition (financial
or otherwise), earnings, business, prospects or results of operations
of the Company and the Banks on a consolidated basis. All of the
issued and outstanding shares of capital stock of the Banks (A) have
been duly authorized and are validly issued, (B) are fully paid and
nonassessable except to the extent such shares may be deemed
assessable under 12 U.S.C. Section 55 or 12 U.S.C. Section 1831o, and
(C) except as disclosed in the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), are
directly owned by the Company free and clear of any security interest,
mortgage, pledge, lien, encumbrance,

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<PAGE> 7

restriction upon voting or transfer, preemptive rights, claim or
equity. Except as disclosed in the Prospectus, there are no
outstanding rights, warrants or options to acquire or instruments
convertible into or exchangeable for any capital stock of the Company
and the Banks.

(ix) The capital stock of the Company conforms to
the description thereof contained in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus). The outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, and no such shares were issued in violation of the
preemptive or similar rights of any security holder of the Company; no
person has any preemptive or similar right to purchase any shares of
capital stock of the Company. Except as disclosed in the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), there are no outstanding rights, options or
warrants to acquire any securities of the Company other than options
issued under the Company's Incentive Share Grant Plan and Employee
Stock Option Plan, and there are no outstanding securities convertible
into or exchangeable for any such securities, and no restrictions upon
the voting or transfer of any capital stock of the Company pursuant to
the Company's corporate charter or by-laws or any agreement or other
instrument to which the Company is a party or by which it is bound.

(x) The Company has all requisite corporate power
and authority to issue, sell and deliver the Shares in accordance with
and upon the terms and conditions set forth in this Agreement, the
Certificate of Designations, the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). All corporate action required to be taken by
the Company for the authorization, issuance, sale and delivery of the
Shares in accordance with such terms and conditions has been validly
and sufficiently taken. The Shares, when delivered in accordance with
this Agreement, will be duly and validly issued and outstanding, fully
paid and nonassessable, will not be issued in violation of or subject
to any preemptive or similar rights, and will conform to the
description thereof in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and the Certificate of Designations. None of
the Shares, immediately prior to delivery, will be subject to any
security interest, lien, mortgage, pledge, encumbrance, restriction
upon voting or transfer, preemptive rights, claim, equity or other
defect.

(xi) The Company and the Banks have complied in
all material respects with all federal, state and local statutes,
regulations, ordinances and rules applicable to the ownership and
operation of their properties or the

7
<PAGE> 8

conduct of their businesses as described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and as
currently being conducted.

(xii) The Company and the Banks have all material
permits, easements, consents, licenses, franchises and other
governmental and regulatory authorizations from all appropriate
federal, state, local or other public authorities ("Permits") as are
necessary to own and lease their properties and conduct their
businesses in the manner described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and as
currently being conducted in all material respects. All such Permits
are in full force and effect and each of the Company and the Banks are
in all material respects complying therewith, and no event has
occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or will result in any other material
impairment of the rights of the holder of any such Permit, subject in
each case to such qualification as may be adequately disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Such Permits contain no restrictions that
would materially impair the ability of the Company or the Banks to
conduct their businesses in the manner consistent with their past
practices. Neither the Company nor the Banks have received notice or
otherwise has knowledge of any proceeding or action relating to the
revocation or modification of any such Permit.

(xiii) Neither the Company nor any of the Banks is
in breach or violation of their corporate charter (including without
limitation, the Certificate of Designations), by-laws or other
governing documents. Neither the Company nor the Banks are, and to
the knowledge of the Company no other party is, in violation, breach
or default (with or without notice or lapse of time or both) in the
performance or observance of any term, covenant, agreement,
obligation, representation, warranty or condition contained in (A) any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease, franchise, license, Permit or any other
agreement or instrument to which it is a party or by which it or any
of its properties may be bound, which such breach, violation or
default could have material adverse consequences to the Company and
the Banks on a consolidated basis, and to its knowledge, no other
party has asserted that the Company or any of the Banks is in such
violation, breach or default (provided that the foregoing shall not
apply to defaults by borrowers from the Banks), or (B) except as
disclosed in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), any order, decree,
judgment, rule or regulation of any court, arbitrator, government, or

8
<PAGE> 9

governmental agency or instrumentality, domestic or foreign, having
jurisdiction over the Company or the Banks or any of their respective
properties the breach, violation or default of which could have a
material adverse effect on the condition, financial or otherwise,
earnings, affairs, business, prospects, or results of operations of
the Company and the Banks on a consolidated basis.

(xiv) The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
by this Agreement, the Certificate of Designations, the Registration
Statement and the Prospectus (or, if the Prospectus in not in
existence, the most recent Preliminary Prospectus) do not and will not
conflict with, result in the creation or imposition of any material
lien, claim, charge, encumbrance or restriction upon any property or
assets of the Company or the Banks or the Shares pursuant to,
constitute a breach or violation of, or constitute a default under,
with or without notice or lapse of time or both, any of the terms,
provisions or conditions of the charter (including without limitation,
the Certificate of Designations) or by-laws of the Company or the
Banks, any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease, franchise, license, Permit or any other
agreement or instrument to which the Company or the Banks is a party
or by which either of them or any of their respective properties may
be bound or any order, decree, judgment, rule or regulation of any
court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, having jurisdiction over the
Company or the Bank or any of their respective properties which
conflict, creation, imposition, breach, violation or default would
have either singly or in the aggregate a material adverse effect on
the condition, financial or otherwise, earnings, affairs, business,
prospects or results of operations of the Company and the Banks on a
consolidated basis. No authorization, approval, consent or order of,
or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is
required in connection with the transactions contemplated by this
Agreement, the Certificate of Designations, the Registration Statement
and the Prospectus (or such Preliminary Prospectus), except such as
may be required under the 1933 Act, and such as may be required under
state securities laws in connection with the purchase and distribution
of the Shares by the Underwriter. No authorization, approval, consent
or order of or filing, registration or qualification with, any person
(including, without limitation, any court, governmental body or
authority) is required in connection with the transactions
contemplated by this Agreement, the Certificate of Designations, the
Registration Statement and the Prospectus, except such as have been
obtained under the 1933 Act, and such as may be required under state
securities laws or Interpretations or Rules of the National

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<PAGE> 10

Association of Securities Dealers, Inc. ("NASD") in connection with
the purchase and distribution of the Shares by the Underwriter.

(xv) The Company has all requisite corporate power
and authority to enter into this Agreement and this Agreement has been
duly and validly authorized, executed and delivered by the Company and
constitutes the legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
as the enforcement thereof may be limited by general principles of
equity and by bankruptcy or other laws relating to or affecting
creditors' rights generally and except as any indemnification or
contribution provisions thereof may be limited under applicable
securities laws.

(xvi) The Company and the Banks have good and
marketable title in fee simple to all real property and good title to
all personal property owned by them and material to their business, in
each case free and clear of all security interests, liens, mortgages,
pledges, encumbrances, restrictions, claims, equities and other
defects except such as are referred to in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) or such as do not materially affect the value of such
property in the aggregate and do not materially interfere with the use
made or proposed to be made of such property; and all of the leases
under which the Company or the Banks hold real or personal property
are valid, existing and enforceable leases and in full force and
effect with such exceptions as are not material and do not materially
interfere with the use made or proposed to be made of such real or
personal property, and neither the Company nor the Banks is in default
in any material respect of any of the terms or provisions of any
leases.

(xvii) KPMG Peat Marwick LLP, who have certified
certain of the consolidated financial statements of the Company and
the Banks including the notes thereto, included in the Registration
Statement and Prospectus, are independent public accountants with
respect to the Company and the Banks, as required by the 1933 Act and
the 1933 Act Regulations.

(xviii) The consolidated financial statements
including the notes thereto, included in the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) with respect to the Company and
the Banks comply in all material respects with the 1933 Act and the
1933 Act Regulations and present fairly the consolidated financial
position of the Company and the Banks as of the dates indicated and
the consolidated results of operations, cash flows and stockholders'
equity of the Company and the Banks for the periods specified

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<PAGE> 11

and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis. The selected and
summary consolidated financial data concerning the Company and the
Banks included in the Registration Statement and the Prospectus (or
such Preliminary Prospectus) comply in all material respects with the
1933 Act and the 1933 Act Regulations, present fairly the information
set forth therein, and have been compiled on a basis consistent with
that of the consolidated financial statements of the Company and the
Banks in the Registration Statement and the Prospectus (or such
Preliminary Prospectus). The other financial, statistical and
numerical information included in the Registration Statement and the
Prospectus (or such Preliminary Prospectus) comply in all material
respects with the 1933 Act and the 1933 Act Regulations, present
fairly the information shown therein, and to the extent applicable
have been compiled on a basis consistent with the consolidated
financial statements of the Company and the Banks included in the
Registration Statement and the Prospectus (or such Preliminary
Prospectus).

(xix) Since the respective dates as of which
information is given in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), except as otherwise stated therein:

(A) neither the Company nor any of the Banks have
sustained any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree which is material to the
condition (financial or otherwise), earnings, business,
prospects or results of operations of the Company and the
Banks on a consolidated basis;

(B) there has not been any material adverse
change in, or any development which is reasonably likely to
have a material adverse effect on, the condition (financial or
otherwise), earnings, business, prospects or results of
operations of the Company and the Banks on a consolidated
basis, whether or not arising in the ordinary course of
business;

(C) neither the Company nor any of the Banks have
incurred any liabilities or obligations, direct or contingent,
or entered into any material transactions, other than in the
ordinary course of business which is material to the condition
(financial or otherwise), earnings, business, prospects or
results of operations of the Company and the Banks on a
consolidated basis;

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<PAGE> 12

(D) the Company has not declared or paid any
dividend, and neither the Company nor any of the Banks have
become delinquent in the payment of principal or interest on
any outstanding borrowings; and

(E) there has not been any change in the capital
stock (except for the exercise of employee stock options
issued under the Company's Incentive Share Grant Plan and
Employee Stock Option Plan, and disclosed as outstanding),
long-term debt, obligations under capital leases or, other
than in the ordinary course of business, short-term borrowings
of the Company or the Banks.

(xx) Except as set forth in the Registration
Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), no charge,
investigation, action, suit or proceeding is pending or, to the
knowledge of the Company, threatened, against or affecting the Company
or the Banks or any of their respective properties before or by any
court or any regulatory, administrative or governmental official,
commission, board, agency or other authority or body, or any
arbitrator, wherein an unfavorable decision, ruling or finding could
have a material adverse effect on the consummation of this Agreement
or the transactions contemplated herein or the condition (financial or
otherwise), earnings, affairs, business, prospects or results of
operations of the Company and the Banks on a consolidated basis or
which is required to be disclosed in the Registration Statement or the
Prospectus (or such Preliminary Prospectus) and is not so disclosed.

(xxi) There are no contracts or other documents
required to be filed as exhibits to the Registration Statement by the
1933 Act or the 1933 Act Regulations which have not been filed as
exhibits to the Registration Statement, or that are required to be
summarized in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) that are not so
summarized.

(xxii) The Company has not taken, directly or
indirectly, any action designed to result in or which has constituted
or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares, and the
Company is not aware of any such action taken or to be taken by any
affiliate of the Company.

(xxiii) The Company and the Banks own, or possess
adequate rights to use, all patents, copyrights, trademarks, service
marks, trade names and other rights necessary to conduct the
businesses now conducted

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<PAGE> 13

by them in all material respects or as described in the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and neither the Company nor the Banks have
received any notice of infringement or conflict with asserted rights
of others with respect to any patents, copyrights, trademarks, service
marks, trade names or other rights which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the condition
(financial or otherwise), earnings, affairs, business, prospects or
results of operations of the Company and the Banks on a consolidated
basis, and the Company does not know of any basis for any such
infringement or conflict.

(xxiv) Except as adequately disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), no labor dispute involving the Company or the
Banks exists or, to the knowledge of the Company, is imminent which
might be expected to have a material adverse effect on the condition
(financial or otherwise), earnings, affairs, business, prospects or
results of operations of the Company and the Banks on a consolidated
basis or which is required to be disclosed in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus). Neither the Company nor the Banks have received notice
of any existing or threatened labor dispute by the employees of any of
its principal suppliers, customers or contractors which might be
expected to have a material adverse effect on the condition (financial
or otherwise), earnings, affairs, business, prospects or results of
operations of the Company and the Banks on a consolidated basis.

(xxv) The Company and the Banks have timely and
properly prepared and filed all necessary federal, state, local and
foreign tax returns which are required to be filed and have paid all
taxes shown as due thereon and have paid all other taxes and
assessments to the extent that the same shall have become due, except
such as are being contested in good faith or where the failure to so
timely and properly prepare and file would not have a material adverse
effect on the condition (financial or otherwise), earnings, affairs,
business, prospects or results of operations of the Company and the
Banks on a consolidated basis. The Company has no knowledge of any
tax deficiency which has been or might be assessed against the Company
or the Banks which, if the subject of an unfavorable decision, ruling
or finding, would have a material adverse effect on the condition
(financial or otherwise), earnings, affairs, business, prospects or
results of operations of the Company and the Banks on a consolidated
basis.

(xxvi) Each of the material contracts, agreements
and instruments described or referred to in the Registration Statement
or the Prospectus (or, if the Prospectus is not in existence, the most
recent

13
<PAGE> 14

Preliminary Prospectus) and each contract, agreement and instrument
filed as an exhibit to the Registration Statement is in full force and
effect and is the legal, valid and binding agreement of the Company or
the Banks, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by general principles of equity and
by bankruptcy or other laws relating to or affecting creditors' rights
generally. Except as disclosed in the Prospectus (or such Preliminary
Prospectus), to the knowledge of the Company, no other party to any
such agreement is (with or without notice or lapse of time or both) in
breach or default in any material respect thereunder.

(xxvii) No relationship, direct or indirect, exists
between or among the Company or the Banks, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the
Company or the Banks, on the other hand, which is required to be
described in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus) which is not adequately described therein.

(xxviii) No person has the right to request or require
the Company or the Banks to register any securities for offering and
sale under the 1933 Act by reason of the filing of the Registration
Statement with the Commission or the issuance and sale of the Shares
except as adequately disclosed in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).

(xxix) The Depositary Shares have been approved for
quotation on the Nasdaq National Market subject to official notice of
issuance.

(xxx) Except as described in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no contractual encumbrances or restrictions or
material legal restrictions, on the ability of the Banks (A) to pay
dividends or make any other distributions on its capital stock or to
pay any indebtedness owed to the Company, (B) to make any loans or
advances to, or investments in, the Company or (C) to transfer any of
its property or assets to the Company.

(xxxi) The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.

(xxxii) The Company has not distributed and will not
distribute prior to the Closing Date any prospectus in connection with
the Offering, other than a Preliminary Prospectus, the Prospectus, the
Registration Statement and the other materials permitted by the 1933
Act and the 1933

14
<PAGE> 15

Act Regulations and reviewed by the Underwriter.

3. OFFERING BY THE UNDERWRITER. After the Registration
Statement becomes effective or, if the Registration Statement is already
effective, after this Agreement becomes effective, the Underwriter proposes to
offer the Firm Shares for sale to the public upon the terms and conditions set
forth in the Prospectus. The Underwriter may from time to time thereafter
reduce the public offering price and change the other selling terms, provided
the proceeds to the Company shall not be reduced as a result of such reduction
or change.

The Underwriter may reserve and sell such of the Shares
purchased by the Underwriter as the Underwriter may elect to dealers chosen by
it (the "Selected Dealers") at the public offering price set forth in the
Prospectus less the applicable Selected Dealers' concessions set forth therein,
for re-offering by Selected Dealers to the public at the public offering price.
The Underwriter may allow, and Selected Dealers may re-allow, a concession set
forth in the Prospectus to certain other brokers and dealers.

4. CERTAIN COVENANTS OF THE COMPANY. The Company
covenants with the Underwriter as follows:

(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto, if not effective at the time
of execution of this Agreement, to become effective as promptly as possible.
If the Registration Statement has become or becomes effective pursuant to Rule
430A and information has been omitted therefrom in reliance on Rule 430A, then,
the Company will prepare and file in accordance with Rule 430A and Rule 424(b)
copies of the Prospectus or, if required by Rule 430A, a post-effective
amendment to the Registration Statement (including the Prospectus) containing
all information so omitted and will provide evidence satisfactory to the
Underwriter of such timely filing.

(b) The Company shall notify you immediately, and confirm
such notice in writing:

(i) when the Registration Statement, or any
post-effective amendment to the Registration Statement, has become
effective, or when the Prospectus or any supplement to the Prospectus
or any amended Prospectus has been filed;

(ii) of the receipt of any comments or requests
from the Commission;

(iii) of any request of the Commission to amend or

15
<PAGE> 16

supplement the Registration Statement, any Preliminary Prospectus or
the Prospectus or for additional information; and

(iv) of the issuance by the Commission or any
state or other regulatory body of any stop order or other order
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus or the Prospectus,
or suspending the qualification of any of the Shares for offering or
sale in any jurisdiction or the institution or threat of institution
of any proceedings for any of such purposes. The Company shall use
its best efforts to prevent the issuance of any such stop order or of
any other such order and if any such order is issued, to cause such
order to be withdrawn or lifted as soon as possible.

(c) The Company shall furnish to you, from time to time
without charge, as soon as available, as many copies as you may reasonably
request of (i) the registration statement as originally filed and of all
amendments thereto, in executed form, including exhibits, whether filed before
or after the Registration Statement becomes effective, (ii) all exhibits and
documents incorporated therein or filed therewith, (iii) all consents and
certificates of experts in executed form, (iv) each Preliminary Prospectus and
all amendments and supplements thereto, and (v) the Prospectus, and all
amendments and supplements thereto.

(d) During the time when a prospectus is required to be
delivered under the 1933 Act, the Company shall comply to the best of its
ability with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution of the
Shares as contemplated herein and in the Prospectus. The Company shall not
file any amendment to the registration statement as originally filed or to the
Registration Statement and shall not file any amendment thereto or make any
amendment or supplement to any Preliminary Prospectus or to the Prospectus of
which you shall not previously have been advised in writing and provided a copy
a reasonable time prior to the proposed filings thereof or to which you shall
reasonably object. If it is necessary, in your reasonable opinion or in the
reasonable opinion of your counsel to amend or supplement the Registration
Statement or the Prospectus in connection with the distribution of the Shares,
the Company shall forthwith amend or supplement the Registration Statement or
the Prospectus, as the case may be, by preparing and filing with the
Commission, and furnishing to you, such number of copies as you may reasonably
request of an amendment or amendments of, or a supplement or supplements to,
the Registration Statement or the Prospectus, as the case may be (in form and
substance reasonably satisfactory to you and your counsel. If any event shall
occur as a result of which it is necessary to amend or supplement the
Prospectus to correct an untrue statement of a material fact or to include a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if for any reason
it

16
<PAGE> 17

is necessary at any time to amend or supplement the Prospectus to comply with
the 1933 Act and the 1933 Act Regulations, the Company shall, subject to the
second sentence of this subsection (d), forthwith amend or supplement the
Prospectus by preparing and filing with the Commission, and furnishing to you,
such number of copies as you may reasonably request of an amendment or
amendments of, or a supplement or supplements to, the Prospectus (in form and
substance satisfactory to you and your counsel so that, as so amended or
supplemented, the Prospectus shall not contain an untrue statement of a
material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

(e) The Company shall cooperate with you and your counsel
in order to qualify the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions as you may reasonably request and shall
continue such qualifications in effect so long as may be advisable for
distribution of the Shares; provided, however, that the Company shall not be
required to qualify to do business as a foreign corporation or file a general
consent to service of process in any jurisdiction in connection with the
foregoing. The Company shall file such statements and reports as may be
required by the laws of each jurisdiction in which the Shares have been
qualified as above. The Company will notify you immediately of, and confirm in
writing, the suspension of qualification of the Shares or threat thereof in any
jurisdiction.

(f) The Company shall make generally available to its
security holders in the manner contemplated by Rule 158 of the 1933 Act
Regulations and furnish to you as soon as practicable, but in any event not
later than 16 months after the Effective Date, a consolidated earnings
statement of the Company conforming with the requirements of Section 11(a) of
the 1933 Act and Rule 158.

(g) The Company shall use the net proceeds from the sale
of the Shares to be sold by the Company hereunder in the manner specified in
the Prospectus under the caption "Use of Proceeds."

(h) For five years from the Effective Date, the Company
shall furnish to the Underwriter copies of all reports and communications
(financial or otherwise) furnished by the Company to the holders of the
Depositary Shares as a class, copies of all reports and financial statements
filed with or furnished to the Commission (other than portions for which
confidential treatment has been obtained from the Commission) or with any
national securities exchange or the Nasdaq National Market and such other
documents, reports and information concerning the business and financial
condition of the Company as the Underwriter may reasonably request, other than
such documents, reports and information for which the Company has the legal
obligation not to reveal to the Underwriter.

17
<PAGE> 18

(i) For a period of 180 days from the date hereof, the
Company shall not, directly or indirectly, offer for sale, sell or agree to
sell or otherwise dispose of any shares of the common stock securities
convertible into, exercisable or exchangeable for, or that are the economic or
voting equivalent of, any such shares of common stock, or announce the offering
of, or register with the Commission, any shares of common stock or such other
securities, without your prior written consent.

(j) The Company shall use its best efforts to cause the
Depositary Shares to become quoted on the Nasdaq National Market, or in lieu
thereof a national securities exchange, and to remain so quoted for at least
five years from the Effective Date or for such shorter period as may be
specified in a written consent of the Underwriter, provided this shall not
prevent the Company from redeeming the Depositary Shares pursuant to the terms
of the Certificate of Designations.

(k) Subsequent to the date of this Agreement and through
the date which is the later of (i) the day following the date on which the
Underwriter's option to purchase the Option Shares shall expire or (ii) the day
following the Option Closing Date with respect to any Option Shares that the
Underwriter shall elect to purchase, except as described in or contemplated by
the Prospectus, neither the Company nor the Banks shall take any action (or
refrain from taking any action) which will result in the Company or the Banks
incurring any material liability or obligation, direct or contingent, or enter
into any material transaction, except in the ordinary course of business, and
there will not be any material change in the financial position, capital stock,
or any material increase in long-term debt, obligations under capital leases or
short-term borrowings of the Company and the Banks on a consolidated basis.

(l) The Company shall not, for a period of 180 days after
the date hereof, without the prior written consent of the Underwriter,
purchase, redeem or call for redemption, or prepay or give notice of prepayment
(or announce any redemption or call for redemption, or any repayment or notice
of prepayment) of any of the Company's securities, provided that the foregoing
shall not prevent an employee from delivering the Company's securities in
payment of the exercise price of options issued under the Company's Incentive
Share Grant Plan and Employee Stock Option Plan.

(m) The Company shall not take, directly or indirectly,
any action designed to result in or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of
the Shares and the Company is not aware of any such action taken or to be taken
by any affiliate of the Company.

18
<PAGE> 19

(n) Prior to the Closing Date (and, if applicable, the
Option Closing Date), the Company will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Company, the Banks or the offering of the Shares (the "Offering")
without your prior written consent which will not be unreasonably withheld.

5. PAYMENT OF EXPENSES. Whether or not this Agreement
is terminated or the sale of the Shares to the Underwriter is consummated, the
Company covenants and agrees that it will pay or cause to be paid (directly or
by reimbursement) all costs and expenses incident to the performance of the
obligations of the Company under this Agreement, including:

(a) the preparation, printing, filing, delivery and
shipping of the initial registration statement, the Preliminary Prospectus or
Prospectuses, the Registration Statement and the Prospectus and any amendments
or supplements thereto, and the printing, delivery and shipping of this
Agreement and any other underwriting documents (including, without limitation,
selected dealers agreements), the certificates for the Shares and the
Preliminary and Final Blue Sky Memoranda and any legal investment surveys and
any supplements thereto;

(b) all fees, expenses and disbursements of the Company's
counsel and accountants;

(c) all fees and expenses incurred in connection with the
qualification of the Shares under the securities or blue sky laws of such
jurisdictions as you may request, including all filing fees and fees and
disbursements of counsel for the Underwriter in connection therewith,
including, without limitation, in connection with the preparation of the
Preliminary and Final Blue Sky Memoranda and any legal investment surveys and
any supplements thereto;

(d) all fees and expenses incurred in connection with
filings made with the NASD;

(e) any applicable fees and other expenses incurred in
connection with the listing of the Shares on the Nasdaq National Market;

(f) the cost of furnishing to you copies of the initial
registration statements, any Preliminary Prospectus, the Registration Statement
and the Prospectus and all amendments or supplements thereto;

(g) the costs and charges of any transfer agent or
registrar and the fees and disbursements of counsel for any transfer agent or
registrar;

19
<PAGE> 20

(h) all costs and expenses (including stock transfer
taxes) incurred in connection with the printing, issuance and delivery of the
Shares to the Underwriter; and

(i) all other costs and expenses incident to the
performance of the obligations of the Company hereunder and under the
Certificate of Designations that are not otherwise specifically provided for in
this Section 5.

If the sale of Shares contemplated by this Agreement is not
completed for any reason whatsoever, including without limitation if this
Agreement is terminated by the Company or by you for any reason whatsoever,
whether or not such termination is allowable hereunder, the Company will pay
you your accountable out-of-pocket expenses in connection herewith or in
contemplation of the performance of your obligations hereunder, including
without limitation travel expenses, reasonable fees, expenses and disbursements
of counsel or other out-of-pocket expenses incurred by you in connection with
any discussion of the Offering or the contents of the Registration Statement,
any investigation of the Company and the Banks, or any preparation for the
marketing, purchase, sale or delivery of the Shares, in each case following
presentation of reasonably detailed invoices therefor.

If the sale of Shares contemplated by this Agreement is
completed, the Company shall not be responsible for payment of fees or
disbursements of counsel for the Underwriter other than in accordance with
paragraph (c) above, or for the reimbursement of any expenses of the
Underwriter.

6. CONDITIONS OF THE UNDERWRITER' OBLIGATIONS. The
obligations of the Underwriter to purchase and pay for the Firm Shares and,
following exercise of the option granted by the Company in Section 1 of this
Agreement, the Option Shares, are subject, in your sole discretion, to the
accuracy of and compliance with the representations and warranties and
agreements of the Company herein as of the date hereof and as of the Closing
Date (or in the case of the Option Shares, if any, as of the Option Closing
Date), to the accuracy of the written statements of the Company made pursuant
to the provisions hereof, to the performance by the Company of its covenants
and obligations hereunder and to the following additional conditions:

(a) If the Registration Statement or any amendment
thereto filed prior to the Closing Date has not been declared effective prior
to the time of execution hereof, the Registration Statement shall become
effective not later than 10:00 a.m., St. Louis time, on the first business day
following the time of execution of this Agreement, or at such later time and
date as you may agree to in writing. If required, the Prospectus and any
amendment or supplement thereto shall have been timely filed in accordance with
Rule 424(b) and Rule 430A under

20
<PAGE> 21

the 1933 Act and Section 4(a) hereof. No stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued under the 1933 Act or any applicable state
securities laws and no proceedings for that purpose shall have been instituted
or shall be pending, or, to the knowledge of the Company or the Underwriter,
shall be contemplated by the Commission or any state authority. Any request on
the part of the Commission or any state authority for additional information
(to be included in the Registration Statement or Prospectus or otherwise) shall
have been disclosed to you and complied with to your satisfaction and to the
satisfaction of your counsel.

(b) The Underwriter shall not have advised the Company at
or before the Closing Date (and, if applicable, the Option Closing Date) that
the Registration Statement or any post-effective amendment thereto, or the
Prospectus or any amendment or supplement thereto, contains an untrue statement
of a fact which, in your opinion, is material or omits to state a fact which,
in your opinion, is material and is required to be stated therein or is
necessary to make statements therein (in the case of the Prospectus or any
amendment or supplement thereto, in light of the circumstances under which they
were made) not misleading.

(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement, the
Certificate of Designations, the Depositary Shares, the Preferred Stock and the
Shares, and the authorization and form of the Registration Statement and
Prospectus, other than financial statements and other financial data, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby or by the Certificate of Designations shall be satisfactory
in all respects to your counsel, and the Company and the Banks shall have
furnished to such counsel all documents and information relating thereto that
they may reasonably request to enable them to pass upon such matters.

(d) Varnum, Riddering Schmidt & Howlett LLP, counsel for
the Company, shall have furnished to you their signed opinion, dated the
Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to your counsel, to the effect that:

(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the State of
Michigan, and is duly registered as a bank holding company under the
BHC Act. Each of the Banks is a state banking corporation duly
incorporated, validly existing and in good standing under the laws of
Michigan. Each of the Banks is a member of the Federal Reserve
System, and to the knowledge of such counsel no proceedings for the
termination or revocation of such membership are pending or
threatened. The deposit accounts of the Banks are insured by the FDIC
up to the maximum amount provided by law, except

21
<PAGE> 22

to the extent the Prospectus discloses such deposit accounts are
insured by SAIF and to such extent the deposit accounts are so insured
up to the maximum amount provided by law; and to the knowledge of such
counsel no proceedings for the termination or revocation of any such
insurance or such membership are pending or threatened. Each of the
Company and the Banks has full corporate power and authority to own or
lease its properties and to conduct its business as such business is
described in the Prospectus and is currently conducted in all material
respects. All outstanding shares of capital stock of the Banks have
been duly authorized and validly issued and are fully paid and
nonassessable except to the extent such shares may be deemed
assessable under 12 U.S.C. Section 55 or 12 U.S.C. Section 1831o and,
to the best of such counsel's knowledge, except as disclosed in the
Prospectus, there are no outstanding rights, options or warrants to
purchase any such shares or securities convertible into or
exchangeable for any such shares.

(ii) The capital stock of the Company conforms to
the description thereof contained in the Prospectus in all material
respects. The capital stock of the Company authorized to be issued as
of September 30, 1996 is as set forth under the caption
"Capitalization" in the Prospectus, has been duly authorized and
validly issued, is fully paid and nonassessable. The form of
certificates to evidence the Depositary Shares and Preferred Stock
have been approved by the Board of Directors and is in due and proper
form and complies with all applicable requirements. To the best of
such counsel's knowledge there are no outstanding rights, options or
warrants to purchase, no other outstanding securities convertible into
or exchangeable for, and no commitments, plans or arrangements to
issue, any shares of capital stock of the Company, except as described
in the Prospectus.

(iii) The Company has all requisite corporate power
and authority to issue, sell and deliver the Shares in accordance with
and upon the terms and conditions set forth in this Agreement, the
Certificate of Designations, and in the Registration Statement and the
Prospectus. All corporate action required to be taken by the Company
for the authorization, issuance, sale and delivery of the Shares in
accordance with such terms and conditions has been validly and
sufficiently taken. All of the Shares have been duly and validly
authorized and, when delivered in accordance with this Agreement will
be duly and validly issued, fully paid and nonassessable, and will
conform to the description thereof in the Registration Statement, the
Prospectus and the Certificate of Designations. The Depositary Shares
have been approved for quotation on the Nasdaq National Market subject
to official notice of issuance. There are no preemptive or other
rights to subscribe for or to purchase, and other than as disclosed in
the Prospectus

22
<PAGE> 23

no restrictions upon the voting or transfer of, any shares of capital
stock of the Company or the Banks pursuant to the corporate charter
(including without limitation, the Certificate of Designations),
by-laws or other governing documents of the Company or the Banks, or,
to the best of such counsel's knowledge any agreement or other
instrument to which the Company or the Banks is a party or by which
the Company or the Banks may be bound.

(iv) The Company has all requisite corporate power
to enter into and perform its obligations under this Agreement and the
Certificate of Designations, and this Agreement and the Certificate of
Designations have been duly and validly authorized, executed and
delivered by the Company and constitutes the legal, valid and binding
obligation of the Company enforceable in accordance with their terms,
except as the enforcement hereof or thereof may be limited by general
principles of equity and by bankruptcy or other laws relating to or
affecting creditors' rights generally, and except as the
indemnification and contribution provisions hereof may be limited
under applicable laws and certain remedies may not be available in the
case of a non-material breach.

(v) To the best knowledge of such counsel's
knowledge neither the Company nor any of the Banks is in breach or
violation of, or default under, with or without notice or lapse of
time or both, its corporate charter (including without limitation, the
Certificate of Designations) or by-laws. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement, and the Certificate of Designations do
not and will not conflict with, result in the creation or imposition
of any material lien, claim, charge, encumbrance or restriction upon
any property or assets of the Company or the Banks or the Depositary
Shares or Shares pursuant to, or constitute a material breach or
violation of, or constitute a material default under, with or without
notice or lapse of time or both, any of the terms, provisions or
conditions of the charter (including without limitation, the
Certificate of Designations) or by-laws of the Company or the Banks,
or to the best of such counsel's knowledge, any material contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease, franchise, license or any other agreement or instrument to
which the Company the Banks is a party or by which either of them or
any of their respective properties may be bound or any order, decree,
judgment, franchise, license, Permit, rule or regulation of any court,
arbitrator, government, or governmental agency or instrumentality,
domestic or foreign, known to such counsel having jurisdiction over
the Company or the Banks or any of their respective properties which,
in each case, is material to the Company and its subsidiaries on a
consolidated basis. No authorization, approval, consent or order of,
or filing, registration or

23
<PAGE> 24

qualification with, any person (including, without limitation, any
court, governmental body or authority) is required under Michigan law
in connection with the transactions contemplated by this Agreement
except as may be required under Oklahoma securities laws in connection
with the purchase and distribution of the Shares by the Underwriters.

(vi) To the best of such counsel's knowledge
holders of securities of the Company either do not have any right
that, if exercised, would require the Company to cause such securities
to be included in the Registration Statement or have waived such
right. To the best of such counsel's knowledge neither the Company
nor any of the Banks is a party to any agreement or other instrument
which grants rights for or relating to the registration of any
securities of the Company.

(vii) Except as set forth in the Registration
Statement and the Prospectus, to the best of such counsel's knowledge
no action, suit or proceeding at law or in equity is pending or
threatened in writing to which the Company or the Banks is or may be a
party, and no action, suit or proceeding is pending or threatened in
writing against or affecting the Company or the Banks or any of their
properties before or by any court or governmental official,
commission, board or other administrative agency, authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding
could have a material adverse effect on the consummation of this
Agreement or the issuance and sale of the Shares as contemplated
herein or the condition (financial or otherwise), earnings, affairs,
business, or results of operations of the Company and the Banks on a
consolidated basis or which is required to be disclosed in the
Registration Statement or the Prospectus and is not so disclosed.

(viii) No authorization, approval, consent or order
of or filing, registration or qualification with, any person
(including, without limitation, any court, governmental body or
authority) is required in connection with the transactions
contemplated by this Agreement, the Certificate of Designations, the
Registration Statement and the Prospectus, except such as have been
obtained under the 1933 Act, and such as may be required under state
securities laws or Interpretations or Rules of the NASD in connection
with the purchase and distribution of the Shares by the Underwriter.

(ix) The Registration Statement and the Prospectus
and any amendments or supplements thereto (other than the financial
statements or other financial data included therein or omitted
therefrom and Underwriter's Information, as to which such counsel need
express no opinion) comply as to form in all material respects with
the requirements of the 1933 Act and

24
<PAGE> 25

the 1933 Act Regulations as of their respective dates of
effectiveness.

(x) To the best of such counsel's knowledge,
there are no contracts, agreements, leases or other documents of a
character required to be disclosed in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement
that are not so disclosed or filed.

(xi) The statements under the captions
"Description of Capital Stock" and "Supervision and Regulation" in the
Prospectus and in Item 14 of Part II of the Registration Statement,
insofar as such statements constitute a summary of legal and
regulatory matters, documents or proceedings referred to therein are
accurate in all material respects and fairly present the information
called for with respect to such legal matters, documents and
proceedings.

(xii) Such counsel has been advised by the staff of
the Commission that the Registration Statement has become effective
under the 1933 Act; any required filing of the Prospectus pursuant to
Rule 424(b) has been made within the time period required by Rule
424(b); to the best of such counsel's knowledge no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for a stop order are pending or threatened
by the Commission.

(xiii) Except as set forth in the Prospectus, to the
best of such counsel's knowledge there are no contractual encumbrances
or restrictions, or material legal restrictions on the ability of the
Banks (A) to pay dividends or make any other distributions on its
capital stock or to pay indebtedness owed to the Company, (B) to make
any loans or advances to, or investments in, the Company or (C) to
transfer any of its property or assets to the Company.

(xiv) To the best of such counsel's knowledge (A)
the business and operations of the Company and the Banks comply in all
material respects with all statutes, ordinances, laws, rules and
regulations applicable thereto and which are material to the Company
and the Banks on a consolidated basis, except in those instances where
non-compliance would not materially impair the ability of the Company
and the Banks to conduct their business; and (B) the Company and the
Banks possess and are operating in all material respects in compliance
with the terms, provisions and conditions of all permits, consents,
licenses, franchises and governmental and regulatory authorizations
("Permits") and required to conduct their businesses as described in
the Prospectus and which are material to the Company and the Banks on
a consolidated basis, except in those instances where the loss thereof
or non-compliance therewith would

25
<PAGE> 26

not have a material adverse effect on the condition (financial or
otherwise), earnings, affairs, business, prospects or results of
operations of the Company and the Banks on a consolidated basis; to
the best of such counsel's knowledge all such Permits are valid and in
full force and effect, and to the best of such counsel's knowledge no
action, suit or proceeding is pending or threatened which may lead to
the revocation, termination, suspension or non-renewal of any such
Permit, except in those instances where the loss thereof or
non-compliance therewith would not materially impair the ability of
the Company or the Banks to conduct their businesses.

In giving the above opinion, such counsel may state that,
insofar as such opinion involves factual matters, they have relied upon
certificates of officers of the Company including, without limitation,
certificates as to the identity of any and all material contracts, indentures,
mortgages, deeds of trust, loans or credit agreements, notes, leases,
franchises, licenses or other agreements or instruments, and all material
permits, easements, consents, licenses, franchises and government regulatory
authorizations, for purposes of paragraphs (v), (x) and (xiv) hereof and
certificates of public officials.

Such counsel shall also confirm that, in connection with the
preparation of the Registration Statement and Prospectus, such counsel has
participated in conferences with officers and representatives of the Company
and with its independent public accountants and with you and your counsel, at
which conferences such counsel made inquiries of such officers, representatives
and accountants and discussed in detail the contents of the Registration
Statement and Prospectus and such counsel has no reason to believe (A) that the
Registration Statement or any amendment thereto (except for the financial
statements included therein or omitted therefrom Underwriter's Information, as
to which such counsel need express no opinion), at the time the Registration
Statement or any such amendment became effective, contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading or (B) that the
Prospectus or any amendment or supplement thereto (except for the financial
statements included therein or omitted therefrom Underwriter's Information, as
to which such counsel need express no opinion), at the time the Registration
Statement became effective (or, if the term "Prospectus" refers to the
prospectus first filed pursuant to Rule 424(b) of the 1933 Act Regulations, at
the time the Prospectus was issued), at the time any such amended or
supplemented Prospectus was issued, at the Closing Date and, if applicable, the
Option Closing Date, contained or contains any untrue statement of a material
fact or omitted or omits to state any material fact required to be stated
therein or necessary to make the statements therein, not misleading or (C) that
there is any amendment to the Registration Statement required to be filed that
has not already been filed.

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<PAGE> 27

(f) Bryan Cave LLP, counsel for the Underwriter, shall have
furnished you their signed opinion, dated the Closing Date or the Option
Closing Date, as the case may be, with respect to the incorporation of the
Company, the validity of the Shares, the Registration Statement, the Prospectus
and such other related matters as you may reasonably request and there shall
have been furnished to such counsel such documents and other information as
they may request to enable them to pass on such matters. In giving such
opinion, Bryan Cave LLP may rely as to matters of fact upon statements and
certifications of officers of the Company and of other appropriate persons and
may rely as to matters of law, other than law of the United States and the
State of Missouri, and upon the opinion of Varnum, Riddering Schmidt & Howlett
LLP described herein.

(g) On the date of this Agreement and on the Closing Date
(and, if applicable, any Option Closing Date), the Underwriter shall have
received from KPMG Peat Marwick LLP a letter, dated the date of this Agreement
and the Closing Date (and, if applicable, the Option Closing Date),
respectively, in form and substance satisfactory to the Underwriter, confirming
that they are independent public accountants with respect to the Company and
the Banks, within the meaning of the 1933 Act and the 1933 Act Regulations, and
stating in effect that:

(i) In their opinion, the consolidated financial
statements of the Company and the Banks audited by them and included
in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act
and the 1933 Act Regulations.

(ii) On the basis of the procedures specified by
the American Institute of Certified Public Accountants as described in
SAS No. 71, "Interim Financial Information", inquiries of officials of
the Company and the Banks responsible for financial and accounting
matters, and such other inquiries and procedures as may be specified
in such letter, which procedures do not constitute an audit in
accordance with U.S. generally accepted auditing standards, nothing
came to their attention that caused them to believe that, if
applicable, the unaudited interim consolidated financial statements of
the Company and the Banks included in the Registration Statement do
not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and 1933 Act Regulations or
are not in conformity with U.S. generally accepted accounting
principles applied on a basis substantially consistent with the basis
for the audited consolidated financial statements of the Company and
the Banks included in the Registration Statement.

(iii) On the basis of limited procedures, not
constituting an

27
<PAGE> 28

audit in accordance with U.S. generally accepted auditing standards,
consisting of a reading of the unaudited interim financial statements
and other information referred to below, a reading of the latest
available unaudited condensed consolidated financial statements of the
Company and the Banks, inspection of the minute books of the Company
and the Banks since the date of the latest audited financial
statements of the Company and the Banks included in the Registration
Statement, inquiries of officials of the Company and the Banks
responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:

(A) as of a specified date not more than five
days prior to the date of such letter, there have been any
changes in the consolidated capital stock, allowance for loan
losses, or net loans receivable of the Company and the Banks,
any increase in the consolidated long-term debt, short-term
borrowings, obligations under capital leases or real estate
owned by the Company and the Banks, any decreases in
consolidated total assets or shareholders equity of the
Company and the Banks, or any changes, decreases or increases
in other items specified by the Underwriter, in each case as
compared with amounts shown in the latest unaudited interim
consolidated statement of financial condition of the Company
and the Banks included in the Registration Statement except in
each case for changes, increases or decreases which the
Registration Statement specifically discloses, have occurred
or may occur or which are described in such letter; and

(B) for the period from the date of the latest
unaudited interim consolidated financial statements included
in the Registration Statement to the specified date referred
to in Clause (iii)(A), there were any decreases in the
consolidated interest income, net interest income, other
operating income or net income of the Company and the Banks or
in the per share amount of net income of the Company and the
Banks any increase in consolidated other operating expense of
the Company and the Banks, or any changes, decreases or
increases in any other items specified by the Underwriter, in
each case as compared with the comparable period of the
preceding year and with any other period of corresponding
length specified by the Underwriter, except in each case for
increases or decreases which the Registration Statement
discloses have occurred or may occur, or which are described
in such letter.

(iv) In addition to the audit referred to in their
report included in the Registration Statement and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (ii)

28
<PAGE> 29

and (iii) above, they have carried out certain specified procedures,
not constituting an audit in accordance with U.S. generally accepted
auditing standards, with respect to certain amounts, percentages and
financial information specified by the Underwriter which are derived
from the general accounting records and consolidated financial
statements of the Company and the Banks which appear in the
Registration Statement specified by the Underwriter in the
Registration Statement, and have compared such amounts, percentages
and financial information with the accounting records and the material
derived from such records and consolidated financial statements of the
Company and the Banks have found them to be in agreement.

In the event that the letters to be delivered referred to
above set forth any such changes, decreases or increases as specified in
Clauses (iii)(A) or (iii)(B) above, or any exceptions from such agreement
specified in Clause (iv) above, it shall be a further condition to the
obligations of the Underwriter that the Underwriter shall have determined,
after discussions with officers of the Company responsible for financial and
accounting matters, that such changes, decreases, increases or exceptions as
are set forth in such letters do not (x) reflect a material adverse change in
the items specified in Clause (iii)(A) above as compared with the amounts shown
in the latest unaudited consolidated statement of financial condition of the
Company and the Banks included in the Registration Statement, (y) reflect a
material adverse change in the items specified in Clause (iii)(B) above as
compared with the corresponding periods of the prior year or other period
specified by the Underwriter, or (z) reflect a material change in items
specified in Clause (iv) above from the amounts shown in the Preliminary
Prospectus distributed by the Underwriter in connection with the offering
contemplated hereby or from the amounts shown in the Prospectus.

(h) At the Closing Date and, if applicable, the Option
Closing Date, you shall have received certificates of the chief executive
officer and the chief financial and accounting officer of the Company, which
certificates shall be deemed to be made on behalf of the Company dated as of
the Closing Date and, if applicable, the Option Closing Date, evidencing
satisfaction of the conditions of Section 6(a) and stating that (i) the
representations and warranties of the Company set forth in Section 2(a) hereof
are accurate as of the Closing Date and, if applicable, the Option Closing
Date, and that the Company has complied with all agreements and satisfied all
conditions on their part to be performed or satisfied at or prior to such
Closing Date; (ii) since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Company and the
Banks on a consolidated basis; (iii) since such dates there has not been any
material transaction entered into by the Company or the Banks other than

29
<PAGE> 30

transactions in the ordinary course of business; and (iv) they have carefully
examined the Registration Statement and the Prospectus as amended or
supplemented and nothing has come to their attention that would lead them to
believe that either the Registration Statement or the Prospectus, or any
amendment or supplement thereto as of their respective effective or issue
dates, contained, and the Prospectus as amended or supplemented at such Closing
Date (and, if applicable, the Option Closing Date), contains any untrue
statement of a material fact, or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and (v)
covering such other matters as you may reasonably request. The officer's
certificate of the Company shall further state that no stop order affecting the
Registration Statement is in effect or, to their knowledge, threatened.

(i) The NASD, upon review of the terms of the public
offering of the Shares, shall not have objected to the Underwriter's
participation in such offering.

(j) Prior to the Closing Date and, if applicable, the
Option Closing Date, the Company shall have furnished to you and your counsel
all such other documents, certificates and opinions as they have reasonably
requested.

All opinions, certificates, letters and other documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you. The Company shall furnish you with
conformed copies of such opinions, certificates, letters and other documents as
you shall reasonably request.

If any of the conditions referred to in this Section 6 shall
not have been fulfilled when and as required by this Agreement, this Agreement
and all of your obligations hereunder may be terminated by you on notice to the
Company at, or at any time before, the Closing Date or the Option Closing Date,
as applicable. Any such termination shall be without liability of the
Underwriter to the Company.

7. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company agrees to indemnify and hold harmless the
Underwriter, each of its directors, officers and agents, and each person, if
any, who controls the Underwriter within the meaning of the 1933 Act, against
any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and reasonable attorney fees and expenses),
joint or several, arising out of or based (i) upon any untrue statement or
alleged untrue statement of a material fact made by the Company contained in
Section 2(a) of this Agreement (or any certificate delivered by the Company
pursuant hereto Section 6(i) hereto) or

30
<PAGE> 31

the registration statement as originally filed or the Registration Statement,
any Preliminary Prospectus or the Prospectus, or in any amendment or supplement
thereto, (ii) upon any blue sky application or other document executed by the
Company specifically for that purpose or based upon written information
furnished by the Company filed in any state or other jurisdiction in order to
qualify any of the Shares under the securities laws thereof (any such
application, document or information being hereinafter referred to as a "Blue
Sky Application"), (iii) any omission or alleged omission to state a material
fact in the registration statement as originally filed or the Registration
Statement, any Preliminary Prospectus or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application) required to be stated
therein or necessary to make the statements therein not misleading, and against
any and all losses, claims, damages, liabilities and expenses (including
reasonable costs of investigation and attorney fees), joint or several, arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus or the Prospectus, or in
any amendment of supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (iv) the
enforcement of this indemnification provision or the contribution provisions of
Section 7(e); and shall reimburse each such indemnified party for any
reasonable legal or other expenses as incurred, but in no event less frequently
than 30 days after each invoice is submitted, incurred by them in connection
with investigating or defending against or appearing as a third-party witness
in connection with any such loss, claim, damage, liability or action,
notwithstanding the possibility that payments for such expenses might later be
held to be improper, in which case such payments shall be promptly refunded;
provided, however, that the Company shall not be liable in any such case to the
extent, but only to the extent, that any such losses, claims, damages,
liabilities and expenses arise out of or are based upon any untrue statement or
omission or allegation thereof that has been made therein or omitted therefrom
in reliance upon and in conformity with information furnished in writing to the
Company through you by expressly for use therein beneath the heading
"Underwriting;" provided, that the indemnification contained in this paragraph
with respect to any Preliminary Prospectus shall not inure to the benefit of
the Underwriter (or of any person controlling the Underwriter) to the extent
any such losses, claims, damages, liabilities or expenses directly results from
the fact that such Underwriter sold Shares to a person to whom there was not
sent or given, at or prior to the written confirmation of such sale, a copy of
the Prospectus (as amended or supplemented if any amendments or supplements
thereto shall have been furnished to the Underwriter in sufficient time to
distribute same with or prior to the written confirmation of the sale
involved), if required by law, and if such loss, claim, damage, liability or
expense would not have arisen but for the failure to give or send such person
such document. The foregoing indemnity agreement is in addition to any
liability the Company may otherwise

31
<PAGE> 32

have to any such indemnified party.

(b) The Underwriter, agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signed
the Registration Statement and each person, if any, who controls the Company
within the meaning of the 1933 Act, to the same extent as required by the
foregoing indemnity from the Company to the Underwriter, but only with respect
to information relating to such Underwriter furnished in writing to the Company
through you by or on behalf of it expressly for use in connection with the
registration statement as originally filed, the Registration Statement, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
beneath the heading "Underwriting" or in a Blue Sky Application. The foregoing
indemnity agreement is in addition to any liability which the Underwriter may
otherwise have to any such indemnified party.

(c) If any action or claim shall be brought or asserted
against any indemnified party or any person controlling an indemnified party in
respect of which indemnity may be sought from the indemnifying party, such
indemnified party or controlling person shall promptly notify the indemnifying
party in writing, and the indemnifying party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all expenses; provided, however, that the failure so
to notify the indemnifying party shall not relieve it from any liability which
it may have to an indemnified party otherwise than under such paragraph, and
further, shall only relieve it from liability under such paragraph to the
extent prejudiced thereby. Any indemnified party or any such controlling
person shall have the right to employ separate counsel in any such action and
to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such indemnified party or such controlling
person unless (i) the employment thereof has been specifically authorized by
the indemnifying party in writing, (ii) the indemnifying party has failed to
assume the defense or to employ counsel reasonably satisfactory to the
indemnified party or (iii) the named parties to any such action (including any
impleaded parties) include both such indemnified party or such controlling
person and the indemnifying party and such indemnified party or such
controlling person shall have been advised by such counsel that there may be
one or more legal defenses available to it that are different from or in
addition to those available to the indemnifying party (in which case, if such
indemnified party or controlling person notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action on behalf of such indemnified party or such
controlling person) it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time and for

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<PAGE> 33

all such indemnified party and controlling persons, which firm shall be
designated in writing by the indemnified party. Each indemnified party and
each controlling person, as a condition of such indemnity, shall use reasonable
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. The indemnifying party shall not be liable for any settlement
of any such action effected without its written consent, but if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party and any such
controlling person from and against any loss, claim, damage, liability or
expense by reason of such settlement or judgment.

An indemnifying party shall not, without the prior written
consent of each indemnified party, settle, compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or proceeding
in respect of which indemnity may be sought hereunder (whether or not such
indemnified party or any person who controls such indemnified party within the
meaning of the 1933 Act is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes a release of each such
indemnified party reasonably satisfactory to each such indemnified party and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding or unless the indemnifying party shall confirm in a
written agreement with each indemnified party, that notwithstanding any
federal, state or common law, such settlement, compromise or consent shall not
alter the right of any indemnified party or controlling person to
indemnification or contribution as provided in this Agreement.

(d) If the indemnification provided for in this Section 7
is unavailable or insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and the
Underwriter on the other from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Underwriter on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and the Underwriter on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering of the Shares (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by
the

33
<PAGE> 34

Underwriter, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company on the one hand and of the
Underwriter on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the Underwriter
agrees that it would not be just and equitable if contribution pursuant to this
paragraph (d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
the first sentence of this paragraph (d) shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
paragraph (d), the Underwriter shall not be required to contribute any amount
in excess of the amount by which the total price at which the Shares
underwritten by such Underwriter and distributed to the public were offered to
the public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

For purposes of this paragraph (d), each person who controls
the Underwriter within the meaning of the 1933 Act shall have the same rights
to contribution as such Underwriter, and each person who controls the Company
within the meaning of the 1933 Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
preceding sentence. The obligations of the Company under this paragraph (d)
shall be in addition to any liability which the Company may otherwise have and
the obligations of the Underwriter under this paragraph (d) shall be in
addition to any liability that the Underwriter may otherwise have.

(e) The indemnity and contribution agreements contained
in this Section 7 and the representations and warranties of the Company set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of the Underwriter or
any person controlling the Underwriter or by or on behalf of the Company, or
such directors or officers (or any person controlling the Company), (ii)
acceptance of any Shares and payment therefor hereunder and (iii) any
termination of this Agreement. A successor of the Underwriter or of the
Company, such directors or officers (or of any person

34
<PAGE> 35

controlling the Underwriter or the Company) shall be entitled to the benefits
of the indemnity, contribution and reimbursement agreements contained in this
Section 7.

8. TERMINATION. You shall have the right to terminate
this Agreement on behalf of the Underwriter at any time at or prior to the
Closing Date or, with respect to the Underwriter's obligation to purchase the
Option Shares, at any time at or prior to the Option Closing Date, without
liability on the part of the Underwriter to the Company, if:

(a) The Company shall have failed, refused, or been unable to
perform any agreement on its part to be performed under this Agreement, or any
of the conditions referred to in Section 6 shall not have been fulfilled, when
and as required by this Agreement;

(b) The Company or the Banks shall have sustained any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree which in the judgment of the
Underwriter materially impairs the investment quality of the Shares;

(c) There has been since the respective dates as of which
information is given in the Registration Statement or the Prospectus, any
materially adverse change in, or any development which is reasonably likely to
have a material adverse effect on, the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the Company
and the Banks on a consolidated basis, whether or not arising in the ordinary
course of business;

(d) There has occurred any outbreak of hostilities or
other calamity or crisis or material change in general economic, political or
financial conditions, or internal conditions, the effect of which on the
financial markets of the United States is such as to make it, in your
reasonable judgment, impracticable to market the Shares or enforce contracts
for the sale of the Shares;

(e) Trading generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been
suspended, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, by any of
said exchanges or market system or by the Commission or any other governmental
authority;

(f) A banking moratorium shall have been declared by
either federal or Michigan authorities; or

35
<PAGE> 36

(g) Any action shall have been taken by any government in
respect of its monetary affairs which, in your reasonable judgment, has a
material adverse effect on the United States securities markets.

If this Agreement shall be terminated pursuant to this Section
8, the Company shall not then be under any liability to the Underwriter except
as provided in Sections 5 and 7 hereof.

10. EFFECTIVE DATE OF AGREEMENT. If the Registration
Statement is not effective at the time of execution of this Agreement, this
Agreement shall become effective on the Effective Date at the time the
Commission declares the Registration Statement effective. The Company shall
immediately notify the Underwriter when the Registration Statement becomes
effective.

If the Registration Statement is effective at the time of
execution of this Agreement, this Agreement shall become effective at the
earlier of 11:00 a.m. St. Louis time, on the first full business day following
the day on which this Agreement is executed, or at such earlier time as the
Underwriter shall release the Shares for initial public offering. The
Underwriter shall notify the Company immediately after it has taken any action
which causes this Agreement to become effective.

Until such time as this Agreement shall have become effective,
it may be terminated by the Company, by notifying you, or by you by notifying
the Company, except that the provisions of Sections 5 and 7 shall at all times
be effective.

11. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. The representations, warranties, indemnities, agreements and other
statements of the Company and its officers set forth in or made pursuant to
this Agreement and the agreements of the Underwriter contained in Section 7
hereof shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Company or controlling persons of the
Company, or by or on behalf of the Underwriter or controlling persons of the
Underwriter or any termination or cancellation of this Agreement and shall
survive delivery of and payment for the Shares.

12. NOTICES. Except as otherwise provided in this
Agreement, all notices and other communications hereunder shall be in writing
and shall be deemed to have been duly given if delivered by hand, mailed by
registered or certified mail, return receipt requested, or transmitted by any
standard form of telecommunication and confirmed. Notices to the Company shall
be sent to 230 West Main Street, P.O. Box 491, Ionia, Michigan 48846,
Attention: William R. Kohls (with a copy to Varnum, Riddering, Schmidt &
Howlett LLP, 330 Bridge

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<PAGE> 37

Street, N.W., P.O. Box 352, Grand Rapids, Michigan 49501-0352, Attention:
Michael G. Wooldridge, Esq.); and notices to the Underwriter shall be sent to
Stifel, Nicolaus & Company, Incorporated, 500 North Broadway, Suite 1500, St.
Louis, Missouri 63102, Attention: Rick E. Maples (with a copy to Bryan Cave
LLP, 211 North Broadway, Suite 3600, St. Louis, Missouri 63102, Attention:
James L. Nouss, Jr., Esq.).

13. PARTIES. The Agreement herein set forth is made
solely for the benefit of the Underwriter and the Company and, to the extent
expressed, directors and officers of the Company, any person controlling the
Company or the Underwriter, and their respective successors and assigns. No
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser,
in his status as such purchaser, from the Underwriter of the Shares.

14. GOVERNING LAW. This Agreement shall be governed by
the laws of the State of Missouri, without giving effect to the choice of law
or conflicts of law principles thereof.

15. COUNTERPARTS. This Agreement may be executed in one
or more counterparts, and when a counterpart has been executed by each party
hereto all such counterparts taken together shall constitute one and the same
Agreement.

If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon
this shall become a binding agreement between the Company and you in accordance
with its terms.

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<PAGE> 38

Very truly yours,

INDEPENDENT BANK CORPORATION

By:____________________________
Name:
Title:

CONFIRMED AND ACCEPTED,
as of November __, 1996.

STIFEL, NICOLAUS & COMPANY, INCORPORATED

By: ______________________________
Name:
Title:

<PAGE> 1

EXHIBIT 4.1

CERTIFICATE OF DESIGNATION

RIGHTS AND PREFERENCES

OF THE

_____% CUMULATIVE, CONVERTIBLE PREFERRED STOCK, SERIES A

NO PAR VALUE

INDEPENDENT BANK CORPORATION

______________________

WHEREAS, the Articles of Incorporation, as amended, of
Independent Bank Corporation, a corporation organized and existing under the
Michigan Business Corporation Act (the "Corporation"), authorize the issuance
of 200,000 shares of preferred stock, no par value of the Corporation
("Preferred Stock") in one or more series, and authorize the Board of Directors
to fix by resolution or resolutions the designation and amount of each series
of Preferred Stock and the preferences and relative, participating, optional
and other special rights of such shares, and the qualifications, limitations or
restrictions thereof; and

WHEREAS, the Board of Directors of the Corporation has
previously approved the creation and designation of the initial series of
Preferred Stock of the Corporation and fixed the designation and amount thereof
and the preferences and relative, participating, optional and other special
rights of such shares, and the qualifications, limitations or restrictions
thereof, subject to such modifications and designation of dividend rate as may
be determined by the Pricing Committee of the Board of Directors of the
Corporation; and

WHEREAS, the Pricing Committee of the Board of Directors of
the Corporation has been granted the authority by the Board of Directors of the
Corporation to make such modifications and designation of dividend rate with
respect of such Preferred Stock as may be determined by the Pricing Committee
and such Pricing Committee now desires to fix and determine such matters with
respect to the issuance of 172,500 shares of Preferred Stock to be issued and
sold by the Corporation in a public offering.

NOW, THEREFORE, BE IT RESOLVED, that there is hereby created a
series of the Preferred Stock of the Corporation having the preferences and
relative, participating, optional and other special rights, and the
qualifications, limitations or restrictions (in addition to those set forth in
said Articles of Incorporation, as amended), as follows:
<PAGE> 2

1. DESIGNATION. The designation of the series of
Preferred Stock created by this resolution shall be ____% Cumulative,
Convertible Preferred Stock, Series A, no par value, of the Corporation
(hereinafter referred to as "Series A Preferred Stock"), and the number of
shares constituting such series shall be 172,500, which number may be increased
(but not above the total number of shares of Preferred Stock of the Corporation
then authorized by the Articles of Incorporation, as amended from time to time)
or decreased (but not below the number of shares then outstanding) from time to
time by the Board of Directors. The Series A Preferred Stock shall rank prior
to the Common Stock of the Corporation with respect to the payment of dividends
and the distribution of assets. Each share of Series A Preferred Stock shall
have a Liquidation Preference (as defined in paragraph 3 hereof) of $100.

2. DIVIDEND RIGHTS.

(a) The holders of shares of Series A Preferred
Stock shall be entitled to receive, when and as declared by the Board of
Directors, out of funds legally available therefor, cash dividends, accruing
from the date of initial issuance, at the annual rate of ____% per annum of its
Liquidation Preference, and no more, payable, when and as declared by the Board
of Directors, quarterly on _______, ______, ___________, and __________ of each
year (each quarterly period ending on any such date being hereinafter referred
to as a "dividend period"), commencing __________, 1997, at such annual rate.
Each dividend will be payable to holders of record as they appear on the stock
books of the Corporation on such record dates as shall be fixed by the Board of
Directors of the Corporation. The date of initial issuance of shares of Series
A Preferred Stock is hereinafter referred to as the "Issue Date". Dividends
payable on the Series A Preferred Stock (i) for any period other than a full
dividend period shall be computed on the basis of a 360-day year consisting of
twelve 30-day months and (ii) for each full dividend period shall be computed
by dividing the annual dividend rate by four.

(b) Dividends on shares of Series A Preferred
Stock shall be cumulative from the Issue Date whether or not there shall be
funds legally available for the payment thereof. If there shall be outstanding
shares of any other series of Preferred Stock ranking junior to or on a parity
with the Series A Preferred Stock as to dividends, no dividends shall be
declared or paid or set apart for payment on any such other series for any
period unless full cumulative dividends have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof is
set apart for such payment on the Series A Preferred Stock for all dividend
periods terminating on or prior to the date of payment of such dividends. If
dividends on the Series A Preferred Stock and on any other series of Preferred
Stock ranking on a parity as to dividends with the Series A Preferred Stock are
in arrears, in making any dividend payment on account of such arrears, the
Corporation shall make payments ratably upon all outstanding shares of the
Series A Preferred Stock and shares of such other series of Preferred Stock in
proportion to the respective amounts of dividends in arrears on the Series A
Preferred Stock and on such other series of Preferred Stock and on such other
series of Preferred Stock to the date of such

<PAGE> 3

dividend payment. Holders of shares of the Series A Preferred Stock shall not
be entitled to any dividend, whether payable in cash, property or stock, in
excess of full cumulative dividends on such shares. No interest or sum of
money in lieu of interest shall be payable in respect of any dividend payment
or payments which may be in arrears.

(c) Unless full cumulative dividends on all
outstanding shares of the Series A Preferred Stock shall have been paid or
declared and set aside for payment for all past dividend periods, no dividend
(other than a dividend in Common Stock or in any other stock ranking junior to
the Series A Preferred Stock as to dividends and the distribution of assets
upon liquidation, dissolution or winding up) shall be declared upon the Common
Stock or upon any other stock ranking junior to the Series A Preferred Stock as
to dividends and the distribution of assets upon liquidation, dissolution, or
winding up, nor shall any Common Stock or any other stock of the Corporation
ranking junior to or on a parity with the Series A Preferred Stock as to
dividends or upon the distribution of assets upon liquidation, dissolution or
winding up be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation (except by
conversion into or exchange for stock of the Corporation ranking junior to the
Series A Preferred Stock as to dividends and the distribution of assets upon
liquidation, dissolution or winding up).

3. LIQUIDATION PREFERENCES.

(a) In the event of any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary or
involuntary, the holders of Series A Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for distribution to
stockholders an amount equal to $100 per share (which amount is referred to
hereafter as the "Liquidation Preference") plus an amount equal to any accrued
and unpaid dividends thereon to and including the date of such distribution,
and no more, before any distribution shall be made to the holders of Common
Stock or any other class of stock of the Corporation ranking junior to the
Series A Preferred Stock as to the distribution of assets. After payment of
such liquidating distributions, the holders of shares of Series A Preferred
Stock will not be entitled to any further participation in any distribution of
assets by the Corporation.

(b) In the event the assets of the Corporation
available for distribution to stockholders upon any liquidation, dissolution or
winding up of the affairs of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full the amounts payable with respect to the
Series A Preferred Stock and any other shares of Preferred Stock ranking on a
parity with the Series A Preferred Stock as to the distribution of assets, the
holders of Series A Preferred Stock and the holders of such other Preferred
Stock shall share ratably in any distribution of assets of the Corporation in
proportion to the full respective preferential amounts to which they are
entitled.

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<PAGE> 4

(c) The merger or consolidation of the
Corporation into or with any other corporation, the merger or consolidation of
any other corporation into or with the Corporation or the sale of the assets of
the Corporation substantially as an entirety shall not be deemed a liquidation,
dissolution or winding up of the affairs of the Corporation within the meaning
of this Section 3.

4. REDEMPTION.

(a) Subject to obtaining the prior approval of
the Board of Governors of the Federal Reserve System, the Corporation, at its
option, may redeem any or all shares of Series A Preferred Stock, at any time
or from time to time, on or after __________, 2001 at a redemption price of
$100 per share, plus an amount equal to accrued and unpaid dividends thereon to
and including the date of redemption (the "Redemption Price").

(b) If less than all the outstanding shares of
Series A Preferred Stock are to be redeemed, the shares to be redeemed shall be
selected pro rata as nearly as practicable or by lot, or by such other method
as the Board of Directors may determine to be fair and appropriate.

(c) Notice of any redemption shall be given by
first class mail, postage prepaid, mailed not less than thirty (30) nor more
than sixty (60) days prior to the date fixed for redemption to the holders of
record of the shares of Series A Preferred Stock to be redeemed, at their
respective addresses appearing on the books of the Corporation. Notice so
mailed shall be conclusively presumed to have been duly given whether or not
actually received. Such notice shall state: (i) the date fixed for
redemption; (ii) the Redemption Price; (iii) that the holder has the right to
convert such shares into Common Stock until the close of business on the tenth
day preceding the redemption date; (iv) the then-effective conversion price and
the place where certificates for such shares may be surrendered for conversion;
(v) the number of shares of Series A Preferred Stock to be redeemed and if less
than all the shares held by such holder are to be redeemed, the number of such
shares to be so redeemed from such holder; (vi) the place where certificates
for such shares are to be surrendered for payment of the Redemption Price; and
(vii) that, after such date fixed for redemption, the shares to be redeemed
shall not accrue dividends. If such notice is mailed as aforesaid, and if on
or before the date fixed for redemption funds sufficient to redeem the shares
called for redemption are set aside by the Corporation in trust for the account
of the holders of the shares to be redeemed, notwithstanding the fact that any
certificate for shares called for redemption shall not have been surrendered
for cancellation, on and after the redemption date the shares represented
thereby so called for redemption shall be deemed to be no longer outstanding,
dividends thereon shall cease to accrue and all rights of the holders of such
shares as stockholders of the Corporation shall cease (except the right to
receive the Redemption Price, without interest, upon surrender of the
certificate representing such shares). Upon surrender in accordance with the
aforesaid notice of the certificate for any shares so redeemed (duly endorsed
or accompanied by appropriate

4
<PAGE> 5

instruments of transfer, if so required by the Corporation in such notice), the
holders of record of such shares shall be entitled to receive the Redemption
Price, without interest. Notwithstanding the foregoing, however, as and to the
extent that the Corporation is required or permitted under the abandoned
property laws of any jurisdiction to escheat any redemption funds held in trust
for the benefit of any holder, the Corporation shall be absolved of any further
obligation or liability to such holder to the fullest extent provided by any
such law. In case fewer than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.

(d) At the option of the Corporation, if notice of
redemption is mailed as aforesaid, and if prior to the date fixed for
redemption funds sufficient to pay in full the Redemption Price are deposited
in trust, for the account of the holders of the shares to be redeemed, with a
bank or trust company named in such notice doing business in the State of
Michigan or the Borough of Manhattan, The City of New York, State of New York,
and having capital and surplus of at least $_______________ (which bank or
trust company also may be the transfer agent and/or paying agent for the Series
A Preferred Stock) notwithstanding the fact that any certificate(s) for shares
called for redemption shall not have been surrendered for cancellation, on or
after such date of deposit the shares represented thereby so called for
redemption shall not have been surrendered for cancellation, on or after such
date of deposit the shares represented thereby so called for redemption shall
be deemed to be no longer outstanding, and all rights of the holders of such
shares as shareholders of the Corporation shall cease, except the right of the
holders thereof to convert such shares in accordance with the provisions of
Section 5 at any time prior to the close of business on the tenth day preceding
the redemption date and the right of the holders thereof to receive out of the
funds so deposited in trust the Redemption Price, without interest, upon
surrender of the certificate(s) representing such shares. Any funds so
deposited with such bank or trust company in respect of shares of Series A
Preferred Stock converted before the close of business on the tenth day
preceding the redemption date shall be returned to the Corporation upon such
conversion. Unless otherwise required by law, any funds so deposited with such
bank or trust company which shall remain unclaimed by the holders of shares
called for redemption at the end for two years after the redemption date shall
be repaid to the Corporation, on demand, and thereafter the holder of any such
shares shall look only to the Corporation for the payment, without interest, of
the Redemption Price. Notwithstanding the foregoing, however, as and to the
extent that the Corporation is required or permitted under the abandoned
property laws of any jurisdiction to escheat any redemption funds held in trust
for the benefit of any holder, the Corporation shall be absolved of any further
obligation or liability to such holder to the fullest extent provided by any
such laws.

(e) Any provision of this Section 4 to the
contrary notwithstanding, in the event that any quarterly dividend payable on
the Series A Preferred Stock shall be in arrears and until all such dividends
in arrears shall have been paid or declared and set apart for payment, the
Corporation shall not redeem any shares of Series A Preferred Stock unless all
outstanding shares of Series A Preferred Stock are simultaneously redeemed and
shall not

5
<PAGE> 6

purchase or otherwise acquire any shares of Series A Preferred Stock except in
accordance with a purchase or exchange offer made on the same terms to all
holders of record of Series A Preferred Stock for the purchase of all
outstanding shares thereof.

5. CONVERSION RIGHTS. The holders of shares of Series A
Preferred Stock shall have the right, at their option, to convert such shares
into shares of Common Stock on the following terms and conditions:

(a) Shares of Series A Preferred Stock shall be
convertible at any time into fully paid and nonassessable shares of Common
Stock at a conversion price of $_____ per share of Common Stock (the
"Conversion Price"). For purposes of this Section 5, references to shares of
Series A Preferred Stock shall apply equally to fractional shares thereof, but
only to the extent that such fractional shares are integral multiples of 1/4 of
one share. The Conversion Price shall be subject to adjustment from time to
time as hereinafter provided. For purposes of such conversion, each share of
Series A Preferred Stock will be valued at $100, plus an amount equal to
accrued and unpaid dividends thereon through the date of conversion. No
payment or adjustment shall be made on account of any accrued and unpaid
dividends on shares of Common Stock issued upon such conversion subsequent to
the record date for the determination of stockholders entitled to such
dividends. If any shares of Series A Preferred Stock shall be called for
redemption, the right to convert the shares designated for redemption shall
terminate at the close of business on the tenth day preceding the date fixed
for redemption unless default is made in the payment of the Redemption Price.
In the event of default in the payment of the Redemption Price, the right to
convert the shares designated for redemption shall terminate at the close of
business on the business day immediately preceding the date that such default
is cured.

(b) In order to convert shares of Series A
Preferred Stock into Common Stock, the holder thereof shall surrender the
certificates therefor, duly endorsed if the Corporation shall so require, or
accompanied by appropriate instruments of transfer satisfactory to the
Corporation, at the office of the transfer agent for the Series A Preferred
Stock, or at such other office as may be designated by the Corporation,
together with written notice that such holder irrevocably elects to convert
such shares or any fraction of a share of Series A Preferred Stock having a
denominator of 4, each such fractional interest, measured in 1/4 of a share,
being valued for purposes of conversion at $25; references in this Section 5 to
the conversions of any share of Series A Preferred Stock shall also apply,
mutatis mutandis, to such fractional interests. Such notice shall also state
the name and address in which such holder wishes the certificate for the share
of Common Stock issuable upon conversion to be issued. As soon as practicable
after receipt of the certificates representing the shares of Series A Preferred
Stock to be converted and the notice of election to convert the same, the
Corporation shall issue and deliver at said office a certificate for the number
of whole shares of Common Stock issuable upon conversion of the shares of
Series A Preferred Stock surrendered for conversion, together with a cash
payment in lieu of any fraction of a share, as hereinafter provided, to the
person entitled to receive the same. If more than one stock certificate for
Series A Preferred Stock shall be surrendered for conversion at one time

6
<PAGE> 7

by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate number of
shares represented by all the certificates so surrendered. Shares of Series A
Preferred Stock shall be deemed to have been converted immediately prior to the
close of business on the date such shares are surrendered for conversion and
notice of election to convert the same is received by the Corporation in
accordance with the foregoing provision, and the person entitled to receive the
Common Stock issuable upon such conversion shall be deemed for all purposes as
the record holder of such Common Stock as of such date. In the event the
holder of shares of Series A Preferred Stock elects to convert such shares
after such shares have been called for redemption, amounts attributable to
accrued and unpaid dividends thereon shall be paid to the person entitled to
receive the same in full in cash. Otherwise, amounts attributable to accrued
and unpaid dividends thereon shall be paid to the person entitled to receive
the same in either (i) whole shares of Common Stock, together with a cash
payment in lieu of any fraction of a share, as hereinafter provided, or (ii)
cash, at the option of the Company.

(c) In the case of any share of Series A
Preferred Stock which is converted after any record date with respect to the
payment of a dividend on the Series A Preferred Stock and on or prior to the
date on which such dividend is payable by the Corporation (the "Dividend Due
Date"), the dividend due on such Dividend Due Date shall be payable on such
Dividend Due Date to the holder of record of such shares as of such preceding
record date notwithstanding such conversion. The dividend with respect to a
share of Series A Preferred Stock called for redemption on a redemption date
during the period from the close of business on any record date with respect to
the payment of a dividend on the Series A Preferred Stock next preceding any
Dividend Due Date to the opening of business on such Dividend Due Date shall be
payable on such Dividend Due Date to the holder of record of such share on such
dividend record date, notwithstanding the conversion of such share of Series A
Preferred Stock after such record date and prior to such Dividend Due Date.
Except as provided in this subsection, no payment or adjustment shall be made
upon any conversion on account of any dividends accrued on shares of Series A
Preferred Stock surrendered for conversion or on account of any dividends on
the shares of Common Stock issued upon conversion.

(d) No fractional shares of Common Stock shall be
issued upon conversion of any shares of Series A Preferred Stock. If more than
one share of Series A Preferred Stock is surrendered at one time by the same
holder, the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of shares so surrendered. If the
conversion of any shares of Series A Preferred Stock results in a fractional
share of Common Stock, the Corporation shall pay cash in lieu thereof in an
amount equal to such fraction multiplied by the closing price, determined as
provided in subsection (vi) of Section 5(e) below, on the date on which the
shares of Series A Preferred Stock were duly surrendered for conversion, or if
such date is not a trading date, on the next succeeding trading date.

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<PAGE> 8

(e) The Conversion Price shall be adjusted from time to time as follows:

(i) In case the Corporation shall pay or
make a dividend or other distribution on shares of Common
Stock in Common Stock, the Conversion Price in effect at the
opening of business on the date following the date fixed for
the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares
and the total number of shares constituting such dividend or
other distribution, such reduction to become effective
immediately after the opening of business on the day following
the date fixed for such determination. For purposes of this
subsection, the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of
the Corporation but shall include shares issuable in respect
of scrip certificates issued in lieu of fractions of shares of
Common Stock. The Corporation will not pay any dividend or
make any distribution on shares of Common Stock held in the
treasury of the Corporation.

(ii) In case the Corporation shall issue
rights or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common
Stock at a price per share less than the then current market
price per share (determined as provided in subsection (vi)
below) of the Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights
or warrants (other than pursuant to a dividend reinvestment
plan), the Conversion Price in effect at the opening of
business on the day following the date fixed for such
determination shall be reduced by multiplying such Conversion
Price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of
shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered
for subscription or purchase would purchase at such current
market price (determined as provided in subsection (vi) below)
and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed
for such determination plus the number of shares of Common
Stock so offered for subscription or purchase, such reduction
to become effective immediately after the opening of business
on the day following the date fixed for such determination.
For the purposes of this subsection (ii), the number of shares
of Common Stock at anytime outstanding shall not include
shares held in the treasury of the Corporation but shall
include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The
Corporation will not issue any rights or

8
<PAGE> 9

warrants in respect of shares of Common Stock held in the
treasury of the Corporation during the period so held.

(iii) In case outstanding shares of Common
Stock shall be subdivided into a greater number of shares of
Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such
subdivision becomes effective shall be proportionately
reduced, and, conversely, in case outstanding shares of Common
Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Price in effect at the opening of
business on the day following the day upon which such
combination becomes effective shall be proportionately
increased, such reduction or increase, as the case may be, to
become effective immediately after the opening of business on
the day following the day upon which such subdivision or
combination becomes effective.

(iv) In case the Corporation shall, by
dividend or otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness or assets (including
securities, but excluding (1) any rights or warrants referred
to in subsection (ii) above, (2) any dividend or distribution
paid in cash out of the retained earnings of the Corporation
and (3) any dividend or distribution referred to in subsection
(i) above), the Conversion Price shall be adjusted so that the
same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the close of
business on the date fixed for the determination of
stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the current market
price per share (determined as provided in subsection (vi)
below) of the Common Stock on the date fixed for such
determination less the then fair market value (as determined
by the Board of Directors, whose determination shall be
conclusive and shall be described in a statement filed with
the transfer agent for the Series A Preferred Stock) of the
portion of the evidences of indebtedness or assets so
distributed applicable to one share of Common Stock and the
denominator shall be such current market price per share of
the Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day
following the date fixed for the determination of stockholders
entitled to receive such distribution.

(v) For the purposes of this Section 5, the
reclassification of Common Stock into securities including
securities other than Common Stock (other than any
reclassification upon a consolidation or merger to which
Section 5(g) below applies) shall be deemed to involve (A) a
distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such
distribution" and the "date fixed for such determination"
within the meaning of subsection (iv)

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<PAGE> 10

above), and (B) a subdivision or combination, as the case may
be, of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter (and
the effective date of such reclassification shall be deemed to
be "the day upon which such subdivision became effective" or
"the day upon which such combination becomes effective" as the
case may be, and "the day upon which such subdivision or
combination becomes effective" within the meaning of
subsection (iii) above).

(vi) For the purpose of any computation
under subsections (ii) and (iv) above, the current market
price per share of Common Stock on any day shall be deemed to
be the average of the daily closing prices for the thirty (30)
consecutive trading days commencing forty five (45) trading
days before the day in question. The closing price for each
day shall be the reported last sale price or, in case no such
reported sale takes place on such day, the average of the
reported closing bid and asking prices, in either case on the
NASDAQ National Market or, if the Common Stock is no longer
quoted to trading on such system, on the principal national
securities exchange on which the Common Stock is then listed
or admitted to trading or, if the Common Stock is not quoted
on such NASDAQ National Market or listed or admitted to
trading on any national securities exchange, the average of
the closing bid and asked prices in the over-the-counter
market as furnished by any New York Stock Exchange member firm
selected from time to time by the Board of Directors for that
purpose.

(vii) Notwithstanding the foregoing, no
adjustment in the Conversion Price for the Series A Preferred
Shares shall be required unless such adjustment would require
an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of
this subsection (vii) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this Section shall be made
to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.

(f) Whenever the Conversion Price shall be
adjusted as herein provided (i) the Corporation shall forthwith make available
at the office of the transfer agent for the Series A Preferred Stock a
statement describing in reasonable detail the adjustment, the facts requiring
such adjustment and the method of calculation used; and (ii) the Corporation
shall cause to be mailed by first class mail, postage prepaid, as soon as
practicable to each holder of record of shares of Series A Preferred Stock a
notice stating that the Conversion Price has been adjusted and setting forth
the adjusted Conversion Price.

(g) In the event of any consolidation of the
Corporation with or merger of the Corporation into any other corporation (other
than a merger in which the

10
<PAGE> 11

Corporation is the surviving corporation) or a sale, lease or conveyance of the
assets of the Corporation as an entirety or substantially as an entirety, or
any statutory exchange of securities with another corporation, the holder of
each share of Series A Preferred Stock shall have the right, after such
consolidation, merger, sale or exchange to convert such share into the number
and kind of shares of stock or other securities and the amount and kind of
property which such holder would have been entitled to receive upon such
consolidation, merger, sale or exchange, of the number of shares of Common
Stock that would have been issued to such holder had such shares of Series A
Preferred Stock been converted immediately prior to such consolidation, merger
or sale. The provisions of this Section 5(g) shall similarly apply to
successive consolidations, mergers, sales or exchanges.

(h) The Corporation shall pay any taxes that may
be payable in respect of the issuance of shares of Common Stock upon conversion
of shares of Series A Preferred Stock, but the Corporation shall not be
required to pay any taxes which may be payable in respect of any transfer
involved in the issuance of shares of Common Stock in the name other than that
in which the shares of Series A Preferred Stock so converted are registered,
and the Corporation shall not be required to issue or deliver any such shares
unless and until the person requesting such issuance shall have paid to the
Corporation the amount of any such taxes, or shall have established to the
satisfaction of the Corporation that such taxes have been paid.

(i) The Corporation may (but shall not be
required to) make such reductions in the Conversion Price, in addition to those
required by subsections (i) through (iv) of Section 5(e) above, as it considers
to be advisable in order that any event treated for federal income tax purposes
as a dividend of stock or stock rights shall not be taxable to the recipients.

(j) The Corporation shall at all times reserve
and keep available out of its authorized but unissued Common Stock the full
number of shares of Common Stock issuable upon the conversion of all shares of
Series A Preferred Stock then outstanding.

(k) In the event that:

(i) the Corporation shall declare a
dividend or any other distribution on its Common Stock,
payable otherwise than in cash out of retained earnings; or

(ii) the Corporation shall authorize the
granting to the holders of its Common Stock of rights to
subscribe for or purchase any shares of capital stock of any
class or of any other rights; or

(iii) any capital reorganization of the
Corporation, reclassification of the capital stock of the
Corporation, consolidation or merger of the Corporation with
or into another corporation (other than a merger in

11
<PAGE> 12

which the Corporation is the surviving corporation), or sale,
lease or conveyance of the assets of the Corporation as an
entirety or substantially as an entirety to another
corporation occurs; or

(iv) the voluntary or involuntary
dissolution, liquidation or winding up of the Corporation
occurs,

the Corporation shall cause to be mailed to the holders of record of Series A
Preferred Stock at least 15 days prior to the applicable date hereinafter
specified a notice stating (x) the record date for the purpose of such
dividend, distribution of rights or, if a record date is not to be established,
the date as of which the holders of Common Stock of record to be entitled to
such dividend, distribution or rights are to be determined or (y) the date on
which such reorganization, reclassification, consolidation, merger, sale,
lease, conveyance, dissolution, liquidation or winding up is expected to take
place, and the date, if any is to be fixed, as of which holders of Common Stock
of record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, lease, conveyance, dissolution,
liquidation or winding up. Failure to give such notice, or any defect therein,
shall not affect the legality or validity of such dividend, distribution,
reorganization, reclassification, consolidation, merger, sale, lease,
conveyance, dissolution, liquidation or winding up.

(l) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value (if any) of
the shares of Common Stock deliverable upon conversion of the Series A
Preferred Stock, the Corporation will take any corporate action which may, in
the opinion of its counsel, be necessary in order that the Corporation may
validly and legally issue fully paid and nonassessable shares of Common Stock
at the adjusted Conversion Price.

(m) The Corporation will use its best efforts to
list the shares of Common Stock required to be delivered upon conversion of the
Series A Preferred Stock, prior to the delivery, upon each national securities
exchange or the NASDAQ National Market, if any, upon which the outstanding
Common Stock was listed at the time of delivery.

(n) Prior to the delivery of any securities which
the Corporation shall be obligated to deliver upon conversion of the Series A
Preferred Stock, the Corporation will comply with all federal and state laws
and regulations thereunder requiring the registration of those securities with,
or any approval of or consent to the delivery thereof by, any governmental
authority.

6. VOTING RIGHTS. Other than as required by applicable
law, the Series A Preferred Stock shall not have any voting powers either
general or specific, except that:

12
<PAGE> 13

(a) Unless the vote or consent of the holders of
a greater number of shares shall then be required by law, the affirmative vote
or consent of the holders of at least 66 2/3% of all of the shares of Series A
Preferred Stock, and any one or more other series of preferred stock of the
Corporation similarly affected, at the time outstanding, given in person or by
proxy, either in writing or by a vote at a meeting called for the purpose at
which the holders of shares of the Series A Preferred Stock and any such other
series of preferred stock shall vote together as a separate class, shall be
necessary for authorizing, effecting or validating the amendment, alteration or
repeal of any of the provisions of the Articles of Incorporation, as amended,
or of any amendment or supplement thereto (including any certificate of
designation or any similar document relating to any series of preferred stock)
of the Corporation, which would adversely affect the preferences, rights,
powers or privileges, qualifications, limitations and restrictions of the
Series A Preferred Stock.

(b) Unless the vote or consent of the holders of
a greater number of shares shall then be required by law, the affirmative vote
or consent of the holders of at least 66 2/3% of all of the shares of the
Series A Preferred Stock and any other series of preferred stock of the
Corporation ranking on a parity with shares of the Series A Preferred Stock,
either as to dividends or the distribution of assets upon liquidation,
dissolution or winding up, at the time outstanding, given in person or by
proxy, either in writing or by a vote at a meeting called for the purpose at
which the holders of shares of the Series A Preferred Stock and any such other
series of preferred stock of the Corporation shall vote together as a single
class without regard to series, as shall be necessary to create, authorize or
issue, or reclassify any authorized stock of the Corporation into, or create,
authorize or issue any obligation or security convertible into or evidencing a
right to purchase, any shares of any class of stock of the Corporation ranking
prior to the Series A Preferred Stock or ranking prior to any other series of
preferred stock of the Corporation which ranks on a parity with the Series A
Preferred Stock as to dividends or upon the distribution of assets upon
liquidation, dissolution or winding up. Subject to the foregoing, the
Corporation's Articles of Incorporation, as amended, may be amended to increase
the number of authorized shares of preferred stock without the vote of the
holders of Preferred Stock, including the Series A Preferred Stock.

(c) Whenever, at any time or times, dividends
payable on the shares of Series A Preferred Stock shall be in arrears in an
amount equal to at least six full quarterly dividends or shares of the Series A
Preferred Stock at the time outstanding, the holders of the outstanding shares
of Series A Preferred Stock shall have the exclusive right, voting separately
as a class together with holders of shares of any one or more other series of
Preferred Stock ranking on a parity with the Series A Preferred Stock either as
to dividends or the distribution of assets upon liquidation, dissolution or
winding up and upon which like voting rights have been conferred and are
exercisable, to elect two directors of the Corporation for one-year terms at
the Corporation's next annual meeting of stockholders and at each subsequent
annual meeting of stockholders. At elections for such directors, each holder
of Series A Preferred Stock shall be entitled to one vote for each share held
(the holders of shares of any other series of Preferred Stock ranking on such a
parity being entitled to such number of votes, if any, for each share of stock
held as may be granted to

13
<PAGE> 14

them). Upon the vesting of such right of the holders of Series A Preferred
Stock, the maximum authorized number of members of the Board of Directors shall
automatically be increased by two and the two vacancies so created shall be
filled by vote of the holders of the outstanding shares of Series A Preferred
Stock (either alone or together with the holders of shares of any one or more
other series of Preferred Stock ranking on such a parity) as hereinafter set
forth. The right of the holders of Series A Preferred Stock, voting separately
as a class to elect (either alone or together with the holders of shares of any
one or more other series of Preferred Stock ranking on such a parity) members
of the Board of Directors of the Corporation as aforesaid shall continue until
such time as all dividends accumulated on the Series A Preferred Stock shall
have been paid in full or declared and set apart for payment, at which time
such right shall immediately terminate, except as herein or by law expressly
provided, subject to revesting in the event of each and every subsequent
default of the character above mentioned.

(d) Upon termination of such special voting
rights attributable to all holders of the Series A Preferred stock and any
other series or Preferred Stock ranking on a parity with the Series A Preferred
Stock as to dividends or the distribution of assets upon liquidation,
dissolution or winding up and upon which like voting rights have been conferred
and are exercisable, the term of office of each director elected by the holders
of shares of Series A Preferred stock and such parity Preferred Stock (a
"Preferred Stock Director") pursuant to such special voting rights shall
immediately terminate and the number of directors constituting the entire Board
of Directors shall be reduced by the number of Preferred Stock Directors. Any
Preferred Stock Director may be removed by, and shall not be removed otherwise
than by, the vote of the holders of record of a majority of the outstanding
shares of Series A Preferred Stock and all other series of Preferred Stock
ranking on a parity with the Series A Preferred Stock with respect to dividends
who were entitled to participate in such Preferred Stock Director's election,
voting as a separate class, at a meeting called for such purposes. If the
office of any Preferred Stock Director becomes vacant by reason of death,
resignation, retirement, disqualification, removal from office, or otherwise,
the remaining Preferred Stock Director may choose a successor who shall hold
office for the unexpired term in respect of which such vacancy occurred.

7. REACQUIRED SHARES. Shares of Series A Preferred
Stock converted, redeemed, or otherwise purchased or acquired by the
Corporation shall be restored to the status of authorized but unissued shares
of Series A Preferred Stock without designation as to series.

8. RANKING. Any class or classes of stock of the
Corporation shall be deemed to rank:

(i) prior to the Series A Preferred
Stock, as to dividends or as to distribution of assets upon
liquidation, dissolution or winding up, if the holders of such
class shall be entitled to the receipt of dividends or of
amounts

14
<PAGE> 15

distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of
the Series A Preferred Stock;

(ii) on a parity with the Series A
Preferred Stock, as to dividends or as to distribution of
assets upon liquidation, dissolution or winding up, whether or
not the dividend rates, dividend payment dates or redemption
or liquidation prices per share thereof be different from
those of the Series A Preferred Stock, if the holders of such
class of stock and the Series A Preferred Stock shall be
entitled to the receipt of dividends or of the amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in proportion to their respective amounts of
accrued and unpaid dividends per share or liquidation prices,
without preference or priority one over the other; and

(iii) junior to the Series A Preferred Stock,
as to dividends or as to the distribution of assets upon
liquidation, dissolution or winding up, if such stock shall be
Common Stock or if the holders of Series A Preferred Stock
shall be entitled to receipt of dividends or of amounts
distributable upon liquidation, dissolution or winding up, as
the case may be, in preference or priority to the holders of
shares of such stock.

9. NO SINKING FUND. Shares of Series A Preferred Stock
are not subject to the operation of a sinking fund or other obligation of the
Corporation to redeem or retire the Series A Preferred Stock.

The Pricing Committee of the Board of Directors of the
Corporation, pursuant to the express authority of the Corporation's Board of
Directors, which authority was granted pursuant to resolutions adopted by
unanimous written consent of the Board of Directors effective October ___,
1996, duly adopted the Resolution contained in this Certificate on __________,
1996.

15
<PAGE> 16

IN WITNESS WHEREOF, INDEPENDENT BANK CORPORATION, has caused
this Certificate of Designation to be signed by Charles C. Van Loan, its
Principal Executive Officer, and attested by ___________, its Secretary, this
_____ day of _________, 1996.

INDEPENDENT BANK CORPORATION

By:________________________________________
Charles C. Van Loan
Principal Executive Officer

Attest:__________________________
Name: __________________________
Secretary

<PAGE> 1

EXHIBIT 4.3

DRAFT 10/14/96

DEPOSIT AGREEMENT

Dated: As of October _____, 1996

BY AND BETWEEN

INDEPENDENT BANK CORPORATION

-AND-

STATE STREET BANK AND TRUST COMPANY,

AS DEPOSITARY
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE II - FORM OF RECEIPTS, DEPOSITS OF PREFERRED STOCK,
SERIES A, EXECUTION AND DELIVERY, TRANSFER
SURRENDER AND REDEMPTION OF RECEIPTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

SECTION 2.01 - Form and Transferability of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 2.02 - Deposit of Series A Preferred Stock-Execution and
Delivery of Receipts in Respect Thereof . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03 - Optional Redemption of Series A Preferred Stock for cash . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.04 - Registration of Transfers of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.05 - Combinations and Split-ups of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.06 - Surrender of Receipts and withdrawal of Series A
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.07 - Limitations on Execution and Delivery, Transfer, Split-up,
Combination, Surrender and Exchange of Receipts . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.08 - Lost Receipts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.09 - Cancellation and Destruction of Surrendered Receipts . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.10 - Conversion of Series A Preferred Stock into Common Stock . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE III - CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS
AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

SECTION 3.01 - Filing Proofs, Certificates and Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.02 - Payment of Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.03 - Representations and Warranties as to Series A Preferred Stock . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.04 - Representation and Warranty as to Receipts and Depositary
Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

ARTICLE IV - THE SERIES A PREFERRED STOCK; NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

SECTION 4.01 - Cash Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.02 - Distributions Other Than Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.03 - Subscription Rights, Preferences or Privileges . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.04 - Notice of Dividends; Fixing of Record Date for
Holders of Receipts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.05 - Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>

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<PAGE> 3

<TABLE>
<S> <C>
SECTION 4.06 - Changes Affecting Series A Preferred Stock, and
Reclassifications, Recapitalization, etc. . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.07 - Inspection of Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.08 - Lists of Receipt Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 4.09 - Tax and Regulatory Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.10 - Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

ARTICLE V - THE DEPOSITARY AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

SECTION 5.01 - Maintenance of Offices, Agencies and Transfer Books
by the Depositary and the Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.02 - Prevention or Delay in Performance by the Depositary, the
Depositary's Agents, the Registrar or the Company . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.03 - Obligations of the Depositary, the Depositary's Agents,
the Registrar and the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.04 - Resignation and Removal of the Depositary; Appointment
of Successor Depositary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.05 - Notices, Reports and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 5.06 - Indemnification by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 5.07 - Fees, Charges and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

ARTICLE VI - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

SECTION 6.01 - Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.02 - Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

ARTICLE VII - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

SECTION 7.01 - Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.02 - Exclusive Benefits of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 7.03 - Invalidity of Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.04 - Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.05 - Depositary's Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 7.06 - Holders of Receipts are Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.07 - Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.08 - Inspection of Deposit Agreement and Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 7.09 - Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>

-ii-
<PAGE> 4

DRAFT 10/14/96

DEPOSIT AGREEMENT

DEPOSIT AGREEMENT, dated as of October _____, 1996 among INDEPENDENT
BANK CORPORATION, a Michigan corporation, STATE STREET BANK AND TRUST COMPANY,
as Depositary, and all holders from time to time of Receipts (as hereinafter
defined) issued hereunder.

WITNESSETH:

WHEREAS, it is desired to provide, as hereinafter set forth in this
Deposit Agreement, for the deposit of shares of the Company's Series A
Preferred Stock (as hereinafter defined) with the Depositary for the purposes
set forth in this Deposit Agreement and for the issuance hereunder of the
Receipts evidencing Depositary Shares representing a fractional interest in the
Series A Preferred Stock deposited; and

WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed to this Deposit Agreement, with appropriate insertions,
modifications and omissions, as hereinafter provided in this Deposit Agreement;

NOW, THEREFORE, in consideration of the premises contained herein, it
is agreed by and among the parties hereto as follows:

ARTICLE I
DEFINITIONS

The following definitions shall apply to the respective terms (in the
singular and plural forms of such terms) used in this Deposit Agreement and the
Receipts:

SECTION 1.01. "ARTICLES" shall mean the Articles of Incorporation
(including any Designation), as amended from time to time, of the Company.

SECTION 1.02. "COMMON STOCK" shall mean the common stock, par value
$1.00 per share, of the Company.

SECTION 1.03. "COMPANY" shall mean Independent Bank Corporation, a
Michigan corporation, and its successors.

SECTION 1.04. "CORPORATE OFFICE" shall mean the corporate office of
the Depositary at which at any particular time its business in respect of
matters governed by this Deposit Agreement shall be administered, which at the
date of this Deposit Agreement is located at _________
_______________________________________________________________________________.

-1-
<PAGE> 5

SECTION 1.05. "DEPOSIT AGREEMENT" shall mean this agreement, as the
same may be amended, modified or supplemented from time to time.

SECTION 1.06. "DEPOSITARY" shall mean State Street Bank and Trust
Company, having its principal office in the United States and having a combined
capital and surplus of at least $50,000,000, and any successor as depositary
hereunder.

SECTION 1.07. "DEPOSITARY SHARE" shall mean a fractional interest
of one-fourth (1/4) of a share of Series A Preferred Stock deposited with the
Depositary hereunder and the same proportionate interest in any and all other
property received by the Depositary in respect of such share of Series A
Preferred Stock and held under this Deposit Agreement, all as evidenced by the
Receipts issued hereunder. Subject to the terms of this Deposit Agreement,
each owner of a Depositary Share is entitled, proportionately, to all the
rights, preferences and privileges of the Series A Preferred Stock represented
by such Depositary Share, including the dividend, voting, redemption,
conversion and liquidation rights contained in the Designation.

SECTION 1.08. "DEPOSITARY'S AGENT" shall mean an agent appointed by
the Depositary as provided, and for the purposes specified, in Section 7.05.

SECTION 1.09 "DESIGNATION" shall mean the certificate of
designation filed with the Commerce Department of Michigan, establishing the
Series A Preferred Stock as a separate series of Preferred Stock of the
Company.

SECTION 1.10. "RECEIPT" shall mean a Depositary Receipt issued
hereunder to evidence one or more Depositary Shares, whether in definitive or
temporary form, substantially in the form set forth as Exhibit A hereto.

SECTION 1.11. "RECORD DATE" shall mean the date fixed pursuant to
Section 4.04.

SECTION 1.12. "RECORD HOLDER" or "HOLDER" as applied to a Receipt
shall mean the person in whose name a Receipt is registered on the books
maintained by the Depositary for such purpose.

SECTION 1.13. "REGISTRAR" shall mean State Street Bank and Trust
Company or any bank or trust company appointed to register ownership and
transfers of Receipts or the deposited Series A Preferred Stock as herein
provided.

SECTION 1.14. "SECURITIES ACT" shall mean the Securities Act of
1933, as amended.

SECTION 1.15 "SERIES A PREFERRED STOCK" shall mean shares of the
Company's ______________% Cumulative, Convertible Series A Preferred
Stock, no par value per share, heretofore validly issued, fully paid and
nonassessable.

-2-
<PAGE> 6

SECTION 1.16. "TRANSFER AGENT" shall mean State Street Bank and
Trust Company or any bank or trust company appointed to transfer the Receipts
or the deposited Series A Preferred Stock as herein provided.

ARTICLE II
FORM OF RECEIPTS, DEPOSIT OF SERIES A PREFERRED STOCK,
EXECUTION AND DELIVERY, TRANSFER, SURRENDER AND
REDEMPTION OF RECEIPTS

SECTION 2.01. FORM AND TRANSFERABILITY OF RECEIPTS. Definitive
Receipts shall be engraved or printed or lithographed with steel-engraved
borders and underlying tint and shall be substantially in the form set forth in
Exhibit A annexed to this Deposit Agreement, with appropriate insertions,
modifications and omissions, as hereinafter provided. Pending the preparation
of definitive Receipts, the Depositary, upon the written order of the Company,
delivered in compliance with Section 2.02, shall execute and deliver temporary
Receipts which may be printed, lithographed, typewritten, mimeographed or
otherwise substantially of the tenor of the definitive Receipts in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the persons executing such Receipts may
determine, as evidenced by their execution of such Receipts. If temporary
Receipts are issued, the Company and the Depositary will cause definitive
Receipts to be prepared without unreasonable delay. After the preparation of
definitive Receipts, the temporary Receipts shall be exchangeable for
definitive Receipts upon surrender of the temporary Receipts at the Corporate
Office or such other offices, if any, as the Depositary may designate, without
charge to the holder. Upon surrender for cancellation of any one or more
temporary Receipts, the Depositary shall execute and deliver in exchange
therefor definitive Receipts representing the same number of Depositary Shares
as represented by the surrendered temporary Receipt or Receipts. Such exchange
shall be made at the Company's expense and without any charge therefor. Until
so exchanged, the temporary Receipts shall in all respects be entitled to the
same benefits under this Deposit Agreement, and with respect to the Series A
Preferred Stock deposited, as definitive Receipts.

Receipts shall be executed by the Depositary by the manual or
facsimile signature of a duly authorized signatory of the Depositary, provided
that if a Registrar (other than the Depositary) shall have been appointed then
such Receipts shall also be countersigned by manual signature of a duly
authorized signatory of the Registrar. No Receipt shall be entitled to any
benefits under this Deposit Agreement or be valid or obligatory for any purpose
unless it shall have been executed as provided in the preceding sentence. The
Depositary shall record on its books each Receipt executed as provided above
and delivered as hereinafter provided.

Except as the Depositary may otherwise determine, Receipts shall be in
denominations of any number of whole Depositary Shares. All Receipts shall be
dated the date of their issuance.

Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of
this Deposit Agreement as may be required by the Depositary or required to
comply with any applicable law or regulation or with the

-3-
<PAGE> 7

rules and regulations of any securities exchange upon which the Series A
Preferred Stock, the Depositary Shares or the Receipts may be listed or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Receipts are subject.

Title to any Receipt (and to the Depositary Shares evidenced by such
Receipt) that is properly endorsed or accompanied by a properly executed
instrument of transfer or endorsement shall be transferable by delivery with
the same effect as in the case of a negotiable instrument; provided, however,
that until a Receipt shall be transferred on the books of the Depositary as
provided in Section 2.04, the Depositary may, notwithstanding any notice to the
contrary, treat the record holder thereof at such time as the absolute owner
thereof for the purpose of determining the person entitled to distribution of
dividends or other distributions, to the exercise of any conversion rights or
to any notice provided for in this Deposit Agreement and for all other
purposes.

SECTION 2.02. DEPOSIT OF SERIES A PREFERRED STOCK-EXECUTION AND
DELIVERY OF RECEIPTS IN RESPECT THEREOF. Concurrently with the execution of
this Deposit Agreement, the Company is delivering to the Depositary a
certificate or certificates, registered in the name of the Depositary and
evidencing [172,500] shares of Series A Preferred Stock, properly endorsed or
accompanied, if required by the Depositary, by a duly executed instrument of
transfer or endorsement, in form satisfactory to the Depositary, together with
(i) all such certifications as may be required by the Depositary in accordance
with the provisions of this Deposit Agreement and (ii) a written order of the
Company directing the Depositary to execute and deliver to, or upon the written
order of, the person or persons stated in such order a Receipt or Receipts for
the Depositary Shares representing such deposited Series A Preferred Stock.
The Depositary acknowledges receipt of the deposited Series A Preferred Stock
and related documentation and agrees to hold such deposited Series A Preferred
Stock in an account to be established by the Depositary at the Corporate Office
or at such other office as the Depositary shall determine. The Company hereby
appoints the Depositary as the Registrar and Transfer Agent for the Series A
Preferred Stock deposited hereunder and any Common Stock issued pursuant to
Section 2.10 and the Depositary hereby accepts such appointment and, as such,
will reflect changes in the number of shares (including any fractional shares)
of deposited Series A Preferred Stock held by it by notation, book-entry or
other appropriate method.

If required by the Depositary, Series A Preferred Stock presented for
deposit by the Company at any time, whether or not the register of stockholders
of the Company is closed, shall also be accompanied by an agreement or
assignment, or other instrument satisfactory to the Depositary, that will
provide for the prompt transfer to the Depositary or its nominee of any
dividend or right to subscribe for additional Series A Preferred Stock or to
receive other property that any person in whose name the Series A Preferred
Stock is or has been registered may thereafter receive upon or in respect of
such deposited Series A Preferred Stock, or in lieu thereof such agreement of
indemnity or other agreement as shall be satisfactory to the Depositary.

Upon receipt by the Depositary of a certificate or certificates for
Series A Preferred Stock deposited hereunder, together with the other documents
specified above, and upon registering such Series A Preferred Stock in the name
of the Depositary, the Depositary, subject to the terms and conditions of this
Deposit Agreement, shall execute and deliver to, or upon the order of, the
person or persons named in the written order delivered to the Depositary
referred to in the first paragraph of this Section 2.02, a Receipt or Receipts
for the number of whole Depositary Shares representing the Series A Preferred
Stock so deposited and registered in such name or names as may be requested by
such person

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<PAGE> 8

or persons. The Depositary shall execute and deliver such Receipt or Receipts
at the Corporate Office, except that, at the request, risk and expense of any
person requesting such delivery, such delivery may be made at such other place
as may be designate d by such person. Other than in the case of splits,
combinations or other reclassifications affecting the Series A Preferred Stock,
or in the case of dividends or other distributions of Series A Preferred Stock,
if any, there shall be deposited hereunder not more than the number of shares
constituting the Series A Preferred Stock as set forth in the Designation, as
such may be amended.

The Company shall deliver to the Depositary from time to time such
quantities of Receipts as the Depositary may request to enable the Depositary
to perform its obligations under this Deposit Agreement.

SECTION 2.03. OPTIONAL REDEMPTION OF SERIES A PREFERRED STOCK FOR
CASH. Whenever the Company shall elect to redeem shares of deposited Series A
Preferred Stock for cash in accordance with the provisions of the Designation,
it shall (unless otherwise agreed in writing with the Depositary) give the
Depositary not less than 60 days' prior written notice of the date fixed for
redemption of such Series A Preferred Stock (the "cash redemption date") and of
the number of such shares of Series A Preferred Stock held by the Depositary to
be redeemed and the applicable redemption price, as set forth in the
Designation, including the amount, if any, of accrued and unpaid dividends to
the cash redemption date. The Depositary shall mail, first-class postage
prepaid, notice of the redemption of Series A Preferred Stock and the proposed
simultaneous redemption of the Depositary Shares representing the Series A
Preferred Stock to be redeemed, not less than 30 and not more than 60 days
prior to the cash redemption date, to the holders of record on the record date
fixed for such redemption pursuant to Section 4.04 hereof of the Receipts
evidencing the Depositary Shares to be so redeemed, at the addresses of such
holders as the same appear on the records of the Depositary; but neither
failure to mail any such notice to one or more such holders nor any defect in
any such notice shall affect the sufficiency of the proceedings for redemption
as to other holders. The Company shall provide the Depositary with such
notice, and each such notice shall state: (i) the date fixed for redemption;
(ii) the cash redemption price; (iii) that the holder has the right to convert
such Depositary Shares into Common Stock until the close of business on the
tenth day preceding the redemption date; (iv) the then-effective conversion
price and the place where Receipts may be surrendered for conversion, (v) the
number of shares of deposited Series A Preferred Stock and Depositary Shares to
be redeemed and if less than all the Depositary Shares held by any holder are
to be redeemed, the number of such Depositary Shares held by such holder to be
so redeemed; (vi) the place or places where Receipts evidencing Depositary
Shares to be redeemed are to be surrendered for payment of the cash redemption
price; and (vii) that from and after the cash redemption date dividends in
respect of the Series A Preferred Stock represented by the Depositary Shares to
be redeemed will cease to accrue. If fewer than all the outstanding Depositary
Shares are to be redeemed, the Depositary Shares to be redeemed shall be
selected pro rata (as nearly as may be practicable without creating fractional
Depositary Shares) or by lot, or by such other method as determined by the
Company.

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<PAGE> 9

In the event that notice of redemption has been made as described in
the immediately preceding paragraph and the Company shall then have paid in
full to the Depositary the cash redemption price (determined pursuant to the
Designation) of the Series A Preferred Stock deposited with the Depositary to
be redeemed (including any accrued and unpaid dividends to the cash redemption
date), the Depositary shall redeem the number of Depositary Shares representing
such Series A Preferred Stock so called for redemption by the Company and from
and after the cash redemption date (unless the Company shall have failed to
redeem the shares of Series A Preferred Stock to be redeemed by it as set forth
in the Company's notice provided for in the preceding paragraph), all dividends
in respect of the shares of Series A Preferred Stock called for redemption
shall cease to accrue, the Depositary Shares called for redemption shall be
deemed no longer to be outstanding and all rights of the holders of Receipts
evidencing such Depositary Shares (except the right to receive the cash
redemption price and any money or other property to which holders of such
Receipts were entitled upon such redemption) shall, to the extent of such
Depositary Shares, cease and terminate. Upon surrender in accordance with said
notice of the Receipts evidencing such Depositary Shares (properly endorsed or
assigned for transfer, if the Depositary shall so require), such Depositary
Shares shall be redeemed at a cash redemption price of $25.00 per Depositary
Share plus any other money and other property payable in respect of such Series
A Preferred Stock. The foregoing shall be further subject to the terms and
conditions of the Designation.

If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such
Receipt upon its surrender to the Depositary, together with payment of the cash
redemption price for and all other amounts payable in respect of the Depositary
Shares called for redemption, a new Receipt evidencing the Depositary Shares
evidenced by such prior Receipt and not called for redemption.

SECTION 2.04. REGISTRATION OF TRANSFERS OF RECEIPTS. The Company
hereby appoints the Depositary as the Registrar and Transfer Agent for the
Receipts and the Depositary hereby accepts such appointment and, as such, shall
register on its books from time to time transfers of Receipts upon any
surrender thereof by the holder in person or by a duly authorized attorney,
properly endorsed or accompanied by a properly executed instrument of transfer
or endorsement, together with evidence of the payment of any transfer taxes as
may be required by law. Upon such surrender, the Depositary shall execute a
new Receipt or Receipts and deliver the same to or upon the order of the person
entitled thereto evidencing the same aggregate number of Depositary Shares
evidenced by the Receipt or Receipts surrendered.

SECTION 2.05. COMBINATIONS AND SPLIT-UPS OF RECEIPTS. Upon surrender
of a Receipt or Receipts at the Corporate Office or such other office as the
Depositary may designate for the purpose of effecting a split-up or combination
of Receipts, subject to the terms and conditions of this Deposit Agreement, the
Depositary shall execute and deliver a new Receipt or Receipts in the
authorized denominations requested evidencing the same aggregate number of
Depositary Shares evidenced by the Receipt or Receipts surrendered.

SECTION 2.06. SURRENDER OF RECEIPTS AND WITHDRAWAL OF SERIES A
PREFERRED STOCK. Any holder of a Receipt or Receipts may withdraw any or all
of the deposited Series A Preferred

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<PAGE> 10

Stock represented by the Depositary Shares evidenced by such Receipt or
Receipts and all money and other property, if any, represented by such
Depositary Shares by surrendering such Receipt or Receipts at the Corporate
Office or at such other office as the Depositary may designate for such
withdrawals, provided that a holder of a Receipt or Receipts may not withdraw
such Series A Preferred Stock (or money and other property, if any, represented
thereby) which has previously been called for redemption or which has been
converted to Common Stock in accordance with Section 2.10. After such
surrender, without unreasonable delay, the Depositary shall deliver to such
holder, or to the person or persons designated by such holder as hereinafter
provided, the number of whole shares of such Series A Preferred Stock and all
such money and other property, if any, represented by the Depositary Shares
evidenced by the Receipt or Receipts so surrendered for withdrawal, but holders
of such whole shares of Series A Preferred Stock will not thereafter be
entitled to deposit such Series A Preferred Stock hereunder or to receive
Depositary Shares therefor. If the Receipt or Receipts delivered by the holder
to the Depositary in connection with such withdrawal shall evidence a number of
Depositary Shares in excess of the number of Depositary Shares representing the
number of whole shares of deposited Series A Preferred Stock to be withdrawn,
the Depositary shall at the same time, in addition to such number of whole
shares of Series A Preferred Stock and such money and other property, if any,
to be withdrawn, deliver to such holder, or (subject to Section 2.04) upon his
order, a new Receipt or Receipts evidencing such excess number of Depositary
Shares. Delivery of such Series A Preferred Stock and such money and other
property being withdrawn may be made by the delivery of such certificates,
documents of title and other instruments as the Depositary may deem
appropriate, which, if required by the Depositary, shall be properly endorsed
or accompanied by proper instruments of transfer. Partial shares of Series A
Preferred Stock will not be issued to holders of Depositary Shares.

If the deposited Series A Preferred Stock and the money and other
property being withdrawn are to be delivered to a person or persons other than
the record holder of the Receipt or Receipts being surrendered for withdrawal
of Series A Preferred Stock, such holder shall execute and deliver to the
Depositary a written order so directing the Depositary and the Depositary may
require that the Receipt or Receipts surrendered by such holder for withdrawal
of such shares of Series A Preferred Stock be properly endorsed in blank or
accompanied by a properly executed instrument of transfer or endorsement in
blank.

The Depositary shall deliver the deposited Series A Preferred Stock
and the money and other property, if any, represented by the Depositary Shares
evidenced by Receipts surrendered for withdrawal at the Corporate Office,
except that, at the request, risk and expense of the holder surrendering such
Receipt or Receipts and for the account, of the holder thereof, such delivery
may be made at such other place as may be designated by such holder.

SECTION 2.07. LIMITATIONS ON EXECUTION AND DELIVERY, TRANSFER,
SPLIT-UP, COMBINATION, SURRENDER AND EXCHANGE OF RECEIPTS. As a condition
precedent to the execution and delivery, transfer, split-up, combination,
surrender or exchange of any Receipt, the Depositary, any of the Depositary's
Agents or the Company may require any or all of the following: (i) payment to
it of a sum sufficient for the payment (or, in the event that the Depositary or
the Company shall have made such payment, the reimbursement to it) of any tax
or other governmental charge with

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<PAGE> 11

respect thereto (including any such tax or charge with respect to the Series A
Preferred Stock being deposited or withdrawn); (ii) the production of proof
satisfactory to it as to the identity and genuineness of any signature (or the
authority of any signature); and (iii) compliance with such regulations, if
any, as the Depositary or the Company may establish consistent with the
provisions of this Deposit Agreement as may be required by any securities
exchange upon which the deposited Series A Preferred Stock, the Depositary
Shares or the Receipts may be included for quotation or listed.

The deposit of Series A Preferred Stock may be refused, the delivery
of Receipts against Series A Preferred Stock may be suspended, the transfer of
Receipts may be refused, and the transfer, split-up, combination, surrender,
exchange or redemption of outstanding Receipts may be suspended (i) during any
period when the register of stockholders of the Company is closed or (ii) if
any such action is deemed reasonably necessary or advisable by the Depositary,
any of the Depositary's Agents or the Company at any time or from time to time
because of any requirement of law or of any government or governmental body or
commission, or under any provision of this Deposit Agreement.

SECTION 2.08. LOST RECEIPTS, ETC. In case any Receipt shall be
mutilated or destroyed or lost or stolen, the Depositary in its discretion may
execute and deliver a Receipt of like form and tenor in exchange and
substitution for such mutilated Receipt or in lieu of and in substitution for
such destroyed, lost or stolen Receipt, provided that the holder thereof
provides the Depositary with (i) evidence reasonably satisfactory to the
Depositary of such destruction, loss or theft of such Receipt, of the
authenticity thereof and of his ownership thereof and (ii) reasonable
indemnification satisfactory to the Depositary and the Company.

SECTION 2.09. CANCELLATION AND DESTRUCTION OF SURRENDERED RECEIPTS.
All Receipts surrendered to the Depositary or any Depositary's Agent shall be
canceled by the Depositary. Except as prohibited by applicable law or
regulation, the Depositary is authorized to destroy such Receipts so cancelled.

SECTION 2.10. CONVERSION OF SERIES A PREFERRED STOCK INTO COMMON
STOCK. Any holder of a Receipt or Receipts may effect the conversion of any
whole number of Depositary Shares into shares of Common Stock by delivering the
Depositary Receipt or Receipts at the Corporate Office or at such other office
as the Depositary may designate for such conversions together with written
notice of the name an address in which the certificate for the shares of Common
Stock is to be issued, provided that a holder of a Receipt or Receipts may not
convert any Depositary Shares representing shares of Preferred Stock previously
called for redemption unless such conversion is effected prior to the close of
business on the tenth day preceeding the redemption date. After such delivery,
without unreasonable delay, the Depositary shall deliver to such holder the
number of whole shares of Common Stock into which the shares and/or fraction of
a share of Series A Preferred Stock represented by such Depositary Shares have
been converted pursuant to the conversion price and the conversion terms
specified in the Designation. No fractional shares of Common Stock will be
issued upon conversion, and if such conversion would result in a fractional

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<PAGE> 12

share being issued, an amount will be paid in cash equal to the value of the
fractional interest based on the pricing mechanism for shares of Common Stock
specified in the Designation.

ARTICLE III
CERTAIN OBLIGATIONS OF HOLDERS OF RECEIPTS AND THE COMPANY

SECTION 3.01. FILING PROOFS, CERTIFICATES AND OTHER INFORMATION. Any
person presenting Series A Preferred Stock for deposit or any holder of a
Receipt may be required from time to time to file such proof of residence or
other information, to execute such certificates and to make such
representations and warranties as the Depositary or the Company may reasonably
deem necessary or proper. The Depositary or the Company may withhold or delay
the delivery of any Receipt, the transfer, redemption or exchange of any
Receipt, the withdrawal of the deposited Series A Preferred Stock represented
by the Depositary Shares evidenced by any Receipt, the distribution of any
dividend or other distribution or the sale of any rights or of the proceeds
thereof, until such proof or other information is filed, such certificates are
executed or such representations and warranties are made.

SECTION 3.02. PAYMENT OF FEES AND EXPENSES. Holders of Receipts
shall be obligated to make payments to the Depositary of certain fees and
expenses, as provided in Section 5.07, or provide evidence reasonably
satisfactory to the Depositary that such fees and expenses have been paid.
Until such payment is made, transfer of any Receipt or any withdrawal of the
Series A Preferred Stock or money or other property, if any, represented by the
Depositary Shares evidenced by such Receipt may be refused, any dividend or
other distribution may be withheld, and any part or all of the Series A
Preferred Stock or other property represented by the Depositary Shares
evidenced by such Receipt may be sold for the account of the holder thereof
(after attempting by reasonable means to notify such holder a reasonable number
of days prior to such sale). Any dividend or other distribution so withheld
and the proceeds of any such sale may be applied to any payment of such fees or
expenses, the holder of such Receipt remaining liable for any deficiency.

SECTION 3.03. REPRESENTATIONS AND WARRANTIES AS TO SERIES A PREFERRED
STOCK. In the case of the initial deposit of the Series A Preferred Stock
hereunder, the Company and, in the case of subsequent deposits thereof, each
person so depositing Series A Preferred Stock under this Deposit Agreement
shall be deemed thereby to represent and warrant that such Series A Preferred
Stock and each certificate therefor are valid and that the person making such
deposit is duly authorized to do so. The Company hereby further represents and
warrants that such Series A Preferred Stock, when issued, will be validly
issued, fully paid and nonassessable. Such representations and warranties
shall survive the deposit of the Series A Preferred Stock and the issuance of
Receipts.

SECTION 3.04. REPRESENTATION AND WARRANTY AS TO RECEIPTS AND
DEPOSITARY SHARES. The Company hereby represents and warrants that the
Receipts, when issued, will evidence legal and valid interests in the
Depositary Shares and each Depositary Share will represent a legal and valid
one fourth (1/4) fractional interest in a share of deposited Series A Preferred
Stock. Such

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<PAGE> 13

representation and warranty shall survive the deposit of the Series A Preferred
Stock and the issuance of Receipts evidencing the Depositary Shares.

ARTICLE IV
THE SERIES A PREFERRED STOCK; NOTICES

SECTION 4.01. CASH DISTRIBUTIONS. Whenever the Depositary shall
receive any cash dividend or other cash distribution of the deposited Series A
Preferred Stock, including any cash received upon redemption of any shares of
Series A Preferred Stock pursuant to Section 2.03, the Depositary shall,
subject to Section 3.02, distribute to record holders of Receipts on the record
date fixed pursuant to Section 4.04 such amounts of such sum as are, as nearly
as practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders; provided, however, that (i) in
case the Company or the Depositary shall be required to and shall withhold from
any cash dividend or other cash distribution in respect of the Series A
Preferred Stock represented by the Receipts held by any holder an amount on
account of taxes, the amount made available for distribution or distributed in
respect of Depositary Shares represented by such Receipts subject to such
withholding shall be reduced accordingly and (ii) no cash dividends will be
paid in respect of any Depositary Share to the extent that it represents any
Series A Preferred Stock converted into Common Stock. The Depositary shall
distribute or make available for distribution, as the case may be, only such
amount, however, as can be distributed without attributing to any holder of
Receipts a fraction of one cent, and any balance not so distributable shall be
held by the Depositary (without liability for interest thereon) and shall be
added to and be treated as part of the next sum received by the Depositary for
distribution to record holders of Receipts then outstanding.

SECTION 4.02. DISTRIBUTIONS OTHER THAN CASH. Whenever the Depositary
shall receive any distribution other than cash on the deposited Series A
Preferred Stock, the Depositary shall, subject to Section 3.02, distribute to
record holders of Receipts on the record date fixed pursuant to Section 4.04
such amounts of the securities or property received by it as are, as nearly as
practicable, in proportion to the respective numbers of Depositary Shares
evidenced by the Receipts held by such holders, in any manner that the
Depositary and the Company may deem equitable and practicable for accomplishing
such distribution, except that no distribution will be made in respect of any
Depositary Share to the extent that it represents any Series A Preferred Stock
converted into Common Stock. If, in the opinion of the Depositary after
consultation with the Company, such distribution cannot be made proportionately
among such record holders, or if for any other reason (including any
requirement that the Company or the Depositary withhold an amount on account of
taxes), the Depositary deems, after consultation with the Company, such
distribution not to be feasible, the Depositary may, with the approval of the
Company, adopt such method as it deems equitable and practicable for the
purpose of effecting such distribution, including the sale (at public or
private sale) of the securities or property thus received, or any part thereof,
at such place or places and upon such terms as it may deem proper. The net
proceeds of any such sale shall, subject to Section 3.02, be distributed or
made available for distribution, as the case may be, by the Depositary to
record holders of Receipts as provided by Section 4.01 in the case of a
distribution received in cash. The Company shall not make any distribution of
such securities or property to the holders of

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<PAGE> 14

Receipts unless the Company shall have provided to the Depositary an opinion of
counsel stating that such securities or property have been registered under the
Securities Act or do not need to be registered.

SECTION 4.03. SUBSCRIPTION RIGHTS, PREFERENCES OR PRIVILEGES. If the
Company shall at any time offer or cause to be offered to the persons in whose
names deposited Series A Preferred Stock is registered on the books of the
Company any rights, preferences or privileges to subscribe for or to purchase
any securities or any rights, preferences or privileges of any other nature,
such rights, preferences or privileges shall in each such instance be made
available by the Depositary to the record holders of Receipts in such manner as
the Company shall instruct (including by the issue to such record holders of
warrants representing such rights, preferences or privileges); provided,
however, that (a) if at the time of issue or offer of any such rights,
preferences or privileges the Company determines upon advice of its legal
counsel that it is not lawful or feasible to make such rights, preferences or
privileges available to the holders of Receipts (by the issue of warrants or
otherwise) or (b) if and to the extent instructed by holders of Receipts who do
not desire to exercise such rights, preferences or privileges, the Depositary
shall then, if so instructed by the Company, and if applicable laws or the
terms of such rights, preferences or privileges so permit, sell such rights,
preferences or privileges of such holders at public or private sale, at such
place or places and upon such terms as it may deem proper. The net proceeds of
any such sale shall, subject to Section 3.01 and Section 3.02, be distributed
by the Depositary to the record holders of Receipts entitled thereto as
provided by Section 4.01 in the case of a distribution received in cash. The
Company shall not make any distribution of such rights, preferences or
privileges, unless the Company shall have provided to the Depositary an opinion
of counsel stating that such rights, preferences or privileges have been
registered under the Securities Act or do not need to be registered.

If registration under the Securities Act of the securities to which
any rights, preferences or privileges relate is required in order for holders
of Receipts to be offered or sold the securities to which such rights,
preferences or privileges relate, the Company agrees that it will promptly file
a registration statement pursuant to the Securities Act with respect to such
rights, preferences or privileges and securities and use its best efforts and
take all steps available to it to cause such registration statement to become
effective sufficiently in advance of the expiration of such rights, preferences
or privileges to enable such holders to exercise such rights, preferences or
privileges. In no event shall the Depositary make available to the holders of
Receipts any right, preference or privilege to subscribe for or to purchase any
securities unless and until such a registration statement shall have become
effective or unless the offering and sale of such securities to such holders
are exempt from registration under the provisions of the Securities Act and the
Company shall have provided to the Depositary an opinion of counsel to such
effect.

If any other action under the law of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to
holders of Receipts, the Company agrees to use its best efforts to take such
action or obtain such authorization, consent or permit sufficiently in advance
of the expiration of such rights, preferences or privileges to enable such
holders to exercise such rights, preferences or privileges.

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<PAGE> 15

SECTION 4.04. NOTICE OF DIVIDENDS; FIXING OF RECORD DATE FOR HOLDERS
OF RECEIPTS. Whenever any cash dividend or other cash distribution shall
become payable, any distribution other than cash shall be made, or any rights,
preferences or privileges shall at any time be offered, with respect to the
deposited Series A Preferred Stock, or whenever the Depositary shall receive
notice of (i) any meeting at which holders of such Series A Preferred Stock are
entitled to vote or of which holders of such Series A Preferred Stock are
entitled to notice or (ii) any election on the part of the Company to redeem
any shares of such Series A Preferred Stock, the Depositary shall in each such
instance fix a record date (which shall be the same date as the record date
fixed by the Company with respect to the Series A Preferred Stock) for the
determination of the holders of Receipts who shall be entitled to receive such
dividend, distribution, rights, preferences or privileges or the net proceeds
of the sale thereof, to give instructions for the exercise of voting rights at
any such meeting or to receive notice of such meeting or whose Depositary
Shares are to be so redeemed.

SECTION 4.05. VOTING RIGHTS. Upon receipt of notice of any meeting
at which the holders of deposited Series A Preferred Stock are entitled to
vote, the Depositary shall, as soon as practicable thereafter, mail to the
record holders of Receipts a notice, which shall be provided by the Company and
which shall contain (i) such information as is contained in such notice of
meeting, (ii) a statement that the holders of Receipts at the close of business
on a specified record date fixed pursuant to Section 4.04 will be entitled,
subject to any applicable provision of law, to instruct the Depositary as to
the exercise of the voting rights pertaining to the amount of Series A
Preferred Stock represented by their respective Depositary Shares and (iii) a
brief statement as to the manner in which such instructions may be given. Upon
the written request of a holder of a Receipt on such record date, the
Depositary shall vote or cause to be voted the amount of Series A Preferred
Stock represented by the Depositary Shares evidenced by such Receipt in
accordance with the instructions set forth in such request. To the extent any
such instructions request the voting of a fractional interest of a share of
deposited Series A Preferred Stock, the Depositary shall aggregate such
interest with all other fractional interests resulting from requests with the
same voting instructions and shall vote the number of whole votes resulting
from such aggregation in accordance with the instructions received in such
requests. The Company hereby agrees to take all reasonable action that may be
deemed necessary by the Depositary in order to enable the Depositary to vote
such Series A Preferred Stock or cause such Series A Preferred Stock to be
voted. In the absence of specific instructions from the holder of a Receipt,
the Depositary will abstain from voting to the extent of the Series A Preferred
Stock represented by the Depositary Shares evidenced by such Receipt. The
Depositary shall not be required to exercise discretion in voting any Series A
Preferred Stock represented by the Depositary Shares evidenced by such Receipt.

SECTION 4.06. CHANGES AFFECTING SERIES A PREFERRED STOCK AND
RECLASSIFICATIONS, RECAPITALIZATION, ETC. Upon any change in par or stated
value, split-up, combination or any other reclassification of Series A
Preferred Stock, or upon any recapitalization, reorganization, merger,
amalgamation or consolidation affecting the Company or to which it is a party
or sale of all or substantially all of the Company's assets, the Depositary
shall, upon the instructions of the Company, (i) make such adjustments in (a)
the fraction of an interest represented by one Depositary Share in one share of
Series A Preferred Stock and (b) the ratio of the redemption price per
Depositary Share to the redemption price of a share of Series A Preferred
Stock, in each case as may be required by

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<PAGE> 16

or as is consistent with the provisions of the Designation to fully reflect the
effects of such change in par or stated value, split-up, combination or other
reclassification of Series A Preferred Stock, or of such recapitalization,
reorganization, merger, amalgamation or consolidation or sale and (ii) treat
any shares of stock or other securities or property (including cash) that shall
be received by the Depositary in exchange for or upon conversion of or in
respect of the Series A Preferred Stock as new deposited property under this
Deposit Agreement, and Receipts then outstanding shall thenceforth represent
the proportionate interests of holders thereof in the new deposited property so
received in exchange for or upon conversion or in respect of such Series A
Preferred Stock. In any such case the Depositary may, in its discretion, with
the approval of the Company, execute and deliver additional Receipts, or may
call for the surrender of all outstanding Receipts to be exchanged for new
Receipts specifically describing such new deposited property. Anything to the
contrary herein notwithstanding, holders of Receipts shall have the right from
and after the effective date of any such change in par or stated value, split-
up, combination or other reclassification of the Series A Preferred Stock or
any such recapitalization, reorganization, merger, amalgamation or
consolidation or sale of all or substantially all the assets of the Company to
surrender such Receipts to the Depositary with instructions to convert,
exchange or surrender the Series A Preferred Stock represented thereby only
into or for, as the case may be, the kind and amount of shares of stock and
other securities and property and cash into which the deposited Series A
Preferred Stock evidenced by such Receipts might have been converted or for
which such Series A Preferred Stock might have been exchanged or surrendered
immediately prior to the effective date of such transaction.

SECTION 4.07. INSPECTION OF REPORTS. The Depositary shall make
available for inspection by holders of Receipts at the Corporate Office and at
such other places as it may from time to time deem advisable during normal
business hours any reports and communications received from the Company that
are both received by the Depositary as the holder of deposited Series A
Preferred Stock and made generally available to the holders of the Series A
Preferred Stock. In addition, the Depositary shall transmit certain notices
and reports to the holders of Receipts as provided in Section 5.05.

SECTION 4.08. LISTS OF RECEIPT HOLDERS. Promptly upon request from
time to time by the Company, the Depositary shall furnish to the Company a
list, as of a recent date specified by the Company, of the names, addresses and
holdings of Depositary Shares of all persons in whose names Receipts are
registered on the books of the Depositary.

SECTION 4.09. TAX AND REGULATORY COMPLIANCE. The Depositary shall be
responsible for (i) preparation and mailing of Forms 1099 for all open and
closed accounts, (ii) foreign tax withholding, (iii) withholding 31 % (or any
withholding as may be required at the then applicable rate) of dividends from
eligible holders of Receipts, (iv) mailing W-9 Forms to new holders of Receipts
without a certified taxpayer identification number, (v) processing certified
W-9 Forms, (vi) preparation and filing of state information returns and (vii)
escheatment services.

SECTION 4.10. WITHHOLDING. Notwithstanding any other provision of
this Deposit Agreement, in the event that the Depositary determines that any
distribution in property is subject to any tax which the Depositary is
obligated by law to withhold, the Depositary may dispose of all

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<PAGE> 17

or a portion of such property in such amounts and in such manner as the
Depositary deems necessary and practicable to pay such taxes, by public or
private sale, and the Depositary shall distribute the net proceeds of any such
sale or the balance of any such property after deduction of such taxes to the
holders of Receipts entitled thereto in proportion to the number of Depositary
Shares held by them respectively.

ARTICLE V
THE DEPOSITARY AND THE COMPANY

SECTION 5.01. MAINTENANCE OF OFFICES, AGENCIES AND TRANSFER BOOKS BY
THE DEPOSITARY AND THE REGISTRAR. The Depositary shall maintain at the
Corporate Office facilities for the execution and delivery, transfer, surrender
and exchange, split-up, combination, conversion and redemption of Receipts and
deposit and withdrawal of Series A Preferred Stock and at the offices of the
Depositary's Agents, if any, facilities for the delivery, transfer, surrender
and exchange, split-up, combination, conversion and redemption of Receipts and
deposit and withdrawal of Series A Preferred Stock, all in accordance with the
provisions of this Deposit Agreement.

The Depositary shall keep books at the Corporate Office for the
registration and transfer of Receipts, which books at all reasonable times
shall be open for inspection by the record holders of Receipts as provided by
applicable law. The Depositary may close such books, at any time or from time
to time, when deemed expedient by it in connection with the performance of its
duties hereunder.

If the Receipts or the Depositary Shares evidenced thereby or the
Series A Preferred Stock represented by such Depositary Shares shall be listed
on the New York Stock Exchange, Inc. or any other stock exchange, or quoted on
the NASDAQ National Market, the Depositary may, with the approval of the
Company, appoint a Registrar (acceptable to the Company) for registration of
such Receipts or Depositary Shares in accordance with the requirements of such
Exchange or the NASD. Such Registrar (which may be the Depositary if so
permitted by the requirements of such Exchange) may be removed and a substitute
registrar appointed by the Depositary upon the request or with the approval of
the Company. If the Receipts, such Depositary Shares or such Series A
Preferred Stock are listed on one or more other stock exchanges or the NASDAQ
National Market, the Depositary will, at the request and expense of the
Company, arrange such facilities for the delivery, transfer, surrender,
redemption, coversion and exchange of such Receipts, such Depositary Shares or
such Series A Preferred Stock as may be required by law or applicable stock
exchange regulations.

SECTION 5.02. PREVENTION OR DELAY IN PERFORMANCE BY THE DEPOSITARY,
THE DEPOSITARY'S AGENTS, THE REGISTRAR OR THE COMPANY. Neither the Depositary,
any Depositary's Agent, any Registrar nor the Company shall incur any liability
to any holder of any Receipt, if by reason of any provision of any present or
future law or regulation thereunder of the United States of America or of any
other governmental authority or, in the case of the Depositary, the
Depositary's Agent or the Registrar, by reason of any provision, present or
future, of the Articles or, in the case of the Company, the Depositary, the
Depositary's Agent or the Registrar, by reason of any act of God or war or
other circumstance beyond the control of the relevant party, the Depositary,
any Depositary's Agent, the Registrar or the Company shall be prevented or
forbidden from doing or performing any act or thing that the terms of this
Deposit Agreement provide shall be done or performed; nor shall the Depositary,
any

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<PAGE> 18

Depositary's Agent, any Registrar or the Company incur any liability to any
holder of a Receipt by reason of any nonperformance or delay, caused as
aforesaid, in the performance of any act or thing that the terms of this
Deposit Agreement provide shall or may be done or performed, or by reason of
any exercise of, or failure to exercise, any discretion provided for in this
Deposit Agreement.

SECTION 5.03. OBLIGATIONS OF THE DEPOSITARY, THE DEPOSITARY'S AGENTS,
THE REGISTRAR AND THE COMPANY. Neither the Depositary, any Depositary's Agent,
any Registrar nor the Company assumes any obligation or shall be subject to any
liability under this Deposit Agreement or any Receipt to holders of Receipts
other than from acts or omissions arising out of conduct constituting bad
faith, negligence (in the case of any action or inaction with respect to the
voting of the deposited Series A Preferred Stock), gross negligence or willful
misconduct in the performance of such duties as are specifically set forth in
this Deposit Agreement.

Neither the Depositary, any Depositary's Agent, any Registrar nor the
Company shall be under any obligation to appear in, prosecute or defend any
action, suit or other proceeding with respect to the deposited Series A
Preferred Stock, Depositary Shares or Receipts that in its reasonable opinion
may involve it in expense or liability, unless indemnity reasonably
satisfactory to it against all expense and liability be furnished as often as
may be required, except that such party shall not be entitled to
indemnification for acts or omissions arising out of conduct constituting bad
faith, negligence (in the case of any action or inaction with respect to the
voting of the deposited Series A Preferred Stock, gross negligence or willful
misconduct in the performance of such duties as are specifically set forth in
this Deposit Agreement.

Neither the Depositary, any Depositary's Agent, any Registrar nor the
Company shall be liable for any action or any failure to act by it in reliance
upon the written advice of legal counsel or accountants, or information
provided by any person presenting Series A Preferred Stock for deposit, any
holder of a Receipt or any other person believed by it in good faith to be
competent to give such information. The Depositary, any Depositary's Agent,
any Registrar and the Company may each rely and shall each be protected in
acting upon any written notice, request, direction or other document believed
by it in good faith to be genuine and to have been signed or presented by the
proper party or parties.

In the event the Depositary shall receive conflicting claims, requests
or instructions from any holders of Receipts, on the one hand, and the Company,
on the other hand, the Depositary shall be entitled to act on such claims,
requests or instructions received from the Company, and shall be entitled to
the full indemnification set forth in Section 5.06 hereof in connection with
any action so taken.

The Depositary shall not be responsible for any failure to carry out
any instruction to vote any of the deposited Series A Preferred Stock or for
the manner or effect of any such vote made, as long as any such action or
non-action is in good faith and does not result from negligence or willful

-15-
<PAGE> 19

misconduct of the Depositary. The Depositary undertakes, and any Registrar
shall be required to undertake, to perform such duties and only such duties as
are specifically set forth in this Deposit Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Depositary or any
Registrar.

The Depositary, its parent, affiliate, or subsidiaries, any
Depositary's Agent, and any Registrar may own, buy, sell or deal in any class
of securities of the Company and its affiliates and in Receipts or Depositary
Shares or become pecuniarily interested in any transaction in which the Company
or its affiliates may be interested or contract with or lend money to or
otherwise act as fully or as freely as if it were not the Depositary or the
Depositary's Agent hereunder. The Depositary may also act as transfer agent or
registrar of any of the securities of the Company and its affiliates or act in
any other capacity for the Company or its affiliates.

It is intended that neither the Depositary nor any Depositary's Agent
shall be deemed to be an "issuer" of the securities under the federal
securities laws or applicable state securities laws, it being expressly
understood and agreed that the Depositary and any Depositary's Agent are acting
only in a ministerial capacity as Depositary for the deposited Series A
Preferred Stock; provided, however, that the Depositary agrees to comply with
all information reporting and withholding requirements applicable to it under
law or this Deposit Agreement in its capacity as Depositary.

Neither the Depositary (or its officers, directors, employees or
agents) nor any Depositary's Agent makes any representation or has any
responsibility as to the validity of the registration statement pursuant to
which the Depositary Shares are registered under the Securities Act, the
deposited Series A Preferred Stock, the Depositary Shares, the Receipts (except
its countersignature thereon) or any instruments referred to therein or herein,
or as to the correctness of any statement made therein or herein; provided,
however, that the Depositary is responsible for its representations in this
Deposit Agreement and for the validity of any action taken or required to be
taken by the Depositary in connection with this Deposit Agreement.

The Company agrees that it will register the deposited Series A
Preferred Stock and the Depositary Shares in accordance with the applicable
securities laws.

SECTION 5.04. RESIGNATION AND REMOVAL OF THE DEPOSITARY; APPOINTMENT
OF SUCCESSOR DEPOSITARY. The Depositary may at any time resign as Depositary
hereunder by notice of its election to do so delivered to the Company, such
resignation to take effect upon the appointment of a successor depositary and
its acceptance of such appointment as hereinafter provided.

The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor depositary and its acceptance of such appointment as
hereinafter provided.

In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor depositary,
which shall be a bank or trust company having its principal office

-16-
<PAGE> 20

in the United States of America and having a combined capital and surplus of at
least $50,000,000. If a successor depositary shall not have been appointed in
60 days, the resigning Depositary may petition a court of competent
jurisdiction to appoint a successor depositary. Every successor depositary
shall execute and deliver to its predecessor and to the Company an instrument
in writing accepting its appointment hereunder, and thereupon such successor
depositary, without any further act or deed, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor and for all
purposes shall be the Depositary under this Deposit Agreement, and such
predecessor, upon payment of -all sums due it and on the written request of the
Company, shall promptly execute and deliver an instrument transferring to such
successor all rights and powers of such predecessor hereunder, shall duly
assign, transfer and deliver all rights, title and interest in the deposited
Series A Preferred Stock and any moneys or property held hereunder to such
successor and shall deliver to such successor a list of the record holders of
all outstanding Receipts. Any successor depositary shall promptly mail notice
of its appointment to the record holders of Receipts.

Any corporation into or with which the Depositary may be merged,
consolidated or converted, or any corporation to which all or a substantial
part of the corporate trust or shareholder services business of the Depositary
may be transferred, shall be the successor of such Depositary without the
execution or filing of any document or any further act. Such successor
depositary may execute the Receipts either in the name of the predecessor
depositary or in the name of the successor depositary.

SECTION 5.05. NOTICES, REPORTS AND DOCUMENTS. The Company agrees
that it will deliver to the Depositary, and the Depositary will, promptly after
receipt thereof, transmit to the record holders of Receipts, in each case at
the address recorded in the Depositary's books, copies of all notices and
reports (including financial statements) required by law, by the rules of any
national securities exchange upon which the Series A Preferred Stock, the
Depositary Shares or the Receipts are included for quotation or is listed or by
the Articles to be furnished by the Company to holders of the deposited Series
A Preferred Stock and, if requested by the holder of any Receipt, a copy of
this Deposit Agreement, the form of Receipt, the Designation and the form of
Series A Preferred Stock. Such transmission will be at the Company's expense
and the Company will provide the Depositary with such number of copies of such
documents as the Depositary may reasonably request. In addition, the
Depositary will transmit to the record holders of Receipts at the Company's
expense such other documents as may be requested by the Company.

SECTION 5.06. INDEMNIFICATION BY THE COMPANY. The Company agrees to
indemnify the Depositary, any Depositary's Agent and any Registrar against, and
hold each of them harmless from, any liability, costs and expenses (including
reasonable attorneys' fees) that may arise out of, or in connection with, its
acting as Depositary, Depositary's Agent or Registrar, respectively, under this
Deposit Agreement and the Receipts, except for any liability arising out of the
willful misconduct, gross negligence, negligence (in the case of any action or
inaction with respect to the voting of the deposited Series A Preferred Stock)
or bad faith on the part of any such person or persons. The obligations of the
Company set forth in this Section 5.06 shall survive any succession of any
Depositary, Registrar or Depositary's Agent or termination of this Deposit
Agreement.

-17-
<PAGE> 21

SECTION 5.07. FEES, CHARGES AND EXPENSES. No charges and expenses of
the Depositary or any Depositary's Agent hereunder shall be payable by any
person, except as provided in this Section 5.07. The Company shall pay all
transfer and other taxes and governmental charges arising solely from the
existence of this Deposit Agreement. The Company shall also pay all fees and
expenses of the Depositary in connection with the initial deposit of the Series
A Preferred Stock and the initial issuance of the Depositary Shares evidenced
by the Receipts, any redemption of the Series A Preferred Stock at the option
of the Company and all withdrawals of the Series A Preferred Stock by holders
of Depositary Shares. If a holder of Receipts requests the Depositary to
perform duties not required under this Deposit Agreement, the Depositary shall
notify the holder of the cost of the performance of such duties prior to the
performance thereof. Such holder will be liable for the charges and expenses
related to such performance. All other fees and expenses of the Depositary and
any Depositary's Agent hereunder and of any Registrar (including, in each case,
fees and expenses of counsel) incident to the performance of their respective
obligations hereunder will be promptly paid as previously agreed between the
Depositary and the Company. The Depositary shall present its statement for
fees and expenses to the Company every month or at such other intervals as the
Company and the Depositary may agree.

ARTICLE VI
AMENDMENT AND TERMINATION

SECTION 6.01. AMENDMENT. The form of the Receipts and any provision
of this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect that they may
deem necessary or desirable; provided, however, that no such amendment (other
than any change in the fees of any Depositary, Registrar or Transfer Agent)
which (i) shall materially and adversely alter the rights of the holders of
Receipts or (ii) would be materially and adversely inconsistent with the rights
granted to the holders of the Series A Preferred Stock pursuant to the Articles
shall be effective unless such amendment shall have been approved by the
holders of at least two thirds (66 2/3%) of the Depositary Shares then
outstanding. In no event shall any amendment impair the right, subject to the
provisions of Section 2.06 and Section 2.07 and Article III, of any holder of
any Depositary Shares to surrender the Receipt evidencing such Depositary
Shares with instructions to the Depositary to deliver to the holder the
deposited Series A Preferred Stock and all money and other property, if any,
represented thereby, except in order to comply with mandatory provisions of
applicable law. Every holder of an outstanding Receipt at the time any such
amendment becomes effective shall be deemed, by continuing to hold such
Receipt, to consent and agree to such amendment and to be bound by this Deposit
Agreement as amended thereby.

SECTION 6.02. TERMINATION. This Deposit Agreement may be terminated
by the Company upon not less than 30 days' prior written notice to the
Depositary if the holders of at least two thirds (66 2/3%) of the Depositary
Shares then outstanding consent to such termination, whereupon the Depositary
shall deliver or make available to each holder of a Receipt, upon surrender of
the Receipt held by such holder, such number of whole or fractional shares of
deposited Series A Preferred Stock as are represented by the Depositary Shares
evidenced by such Receipt, together with any other property held by the
Depositary in respect of such Receipt. This Deposit Agreement will

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<PAGE> 22

automatically terminate if (i) all outstanding Depositary Shares shall have
been redeemed pursuant to Section 2.03 or (ii) there shall have been made a
final distribution in respect of the deposited Series A Preferred Stock in
connection with any liquidation, dissolution or winding up of the Company and
such distribution shall have been distributed to the holders of Receipts
entitled thereto.

Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary, any Depositary's Agent and any Registrar under
Section 5.06 and Section 5.07.

ARTICLE VII
MISCELLANEOUS

SECTION 7.01. COUNTERPARTS. This Deposit Agreement may be executed
in any number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall
constitute one and the same instrument. Delivery of an executed counterpart of
a signature page to this Deposit Agreement by telecopier shall be effective as
delivery of a manually executed counterpart of this Deposit Agreement. Copies
of this Deposit Agreement shall be filed with the Depositary and the
Depositary's Agents and shall be open to inspection during business hours at
the Corporate Office and the respective offices of the Depositary's Agents, if
any, by any holder of a Receipt.

SECTION 7.02. EXCLUSIVE BENEFITS OF PARTIES. This Deposit Agreement
is for the exclusive benefit of the parties hereto, and their respective
successors hereunder, and shall not be deemed to give any legal or equitable
right, remedy or claim to any other person whatsoever.

SECTION 7.03. INVALIDITY OF PROVISIONS. In case any one or more of
the provisions contained in this Deposit Agreement or in the Receipts should be
or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein or
therein shall in no way be affected, prejudiced or disturbed thereby.

SECTION 7.04. NOTICES. Any and all notices to be given to the
Company hereunder or under the Receipts shall be in writing and shall be deemed
to have been duly given if personally delivered or sent by mail, or by telegram
or facsimile transmission confirmed by letter, addressed to the Company at:

INDEPENDENT BANK CORPORATION
230 West Main Street, P.O. Box 491
Ionia, Michigan 48846
Attn: Corporate Secretary
Telephone: (616) 527-5820

or at any other address of which the Company shall have notified the Depositary
in writing.

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<PAGE> 23

Any notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to the Depositary at the Corporate Office.

Any notices given to any record holder of a Receipt hereunder or under
the Receipts shall be in writing and shall be deemed to have been duty given if
personally delivered or sent by mail, or by telegram or telex or telecopier
confirmed by letter, addressed to such record holder at the address of such
record holder as it appears on the books of the Depositary or, if such holder
shall have filed with the Depositary in a timely manner a written request that
notices intended for such holder be mailed to some other address, at the
address designated in such request.

Delivery of a notice sent by mail, or by telegram or telex or
telecopier shall be deemed to be effected at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a telegram
or telex or telecopier message) is deposited, postage prepaid, in a post office
letter box. The Depositary or the Company may, however, act upon any telegram
or telex or telecopier message received by it from the other or from any holder
of a Receipt, notwithstanding that such telegram or telex or telecopier message
shall not subsequently be confirmed by letter as aforesaid.

SECTION 7.05. DEPOSITARY'S AGENTS. The Depositary may from time to
time appoint Depositary's Agents to act in any respect for the Depositary for
the purposes of this Deposit Agreement and may at any time appoint
additional Depositary's Agents and vary or terminate the appointment of such
Depositary's Agents. The Depositary will notify the Company of any such action.

SECTION 7.06. HOLDERS OF RECEIPTS ARE PARTIES. The holders of
Receipts from time to time shall be deemed to be parties to this Deposit
Agreement and shall be bound by all of the terms and conditions hereof and of
the Receipts by acceptance of delivery thereof.

SECTION 7.07. GOVERNING LAW. This Deposit Agreement and the Receipts
and all rights hereunder and thereunder and provisions hereof and thereof shall
be governed by, and construed in accordance with, the law of the State of New
York applicable to agreements made and to be performed in said State.

SECTION 7.08. INSPECTION OF DEPOSIT AGREEMENT AND DESIGNATION.
Copies of this Deposit Agreement and the Designation shall be filed with the
Depositary and the Depositary's Agents and shall be open to inspection during
business hours at the Corporate Office and the respective offices of the
Depositary's Agents, if any, by any holder of any Receipt.

SECTION 7.09. HEADINGS. The headings of articles and sections in
this Deposit Agreement and in the form of the Receipt set forth in Exhibit A
hereto have been inserted for convenience only and are not to be regarded as a
part of this Deposit Agreement or to have any bearing upon the meaning or
interpretation of any provision contained herein or in the Receipts.

-20-
<PAGE> 24

IN WITNESS WHEREOF, Independent Bank Corporation and State Street Bank
and Trust Company have duly executed this Deposit Agreement as of the day and
year first above set forth and all holders of Receipts shall become parties
hereto by and upon acceptance by them of delivery of Receipts issued in
accordance with the terms hereof.

INDEPENDENT BANK CORPORATION

By________________________________
Authorized Officer

STATE STREET BANK AND TRUST COMPANY

By________________________________
Authorized Signatory

-21-

<PAGE> 25

TEMPORARY RECEIPT -- Exchangeable for Definitive Engraved Receipt When Ready
for Delivery

NUMBER
DEPOSITARY SHARES

SEE REVERSE FOR ADDITIONAL
INFORMATION AND CERTAIN DEFINITIONS

CUSIP _____________________

DEPOSITARY RECEIPT FOR DEPOSITARY SHARES,
EACH REPRESENTING 1/4 OF A SHARE OF
________% CUMULATIVE, CONVERTIBLE PREFERRED STOCK, SERIES A, WITHOUT PAR VALUE,
OF

INDEPENDENT BANK CORPORATION

(Incorporated under the laws of the State of Michigan)
THIS DEPOSITARY RECEIPT IS TRANSFERABLE IN BOSTON OR IN THE CITY OF NEW YORK

STATE STREET BANK AND TRUST COMPANY, as Depositary (the "Depositary"), hereby
certifies that

is the registered owner of
DEPOSITARY SHARES

("Depositary Shares"), each Depositary Share representing one fouth (1/4) of
one share of ________% Cumulative, Convertible Preferred Stock, Series A,
without par value (the "Stock"), of Independent Bank Corporation, a corporation
duly organized and existing under the laws of the State of Michigan (the
"Company"), on deposit with the Depositary, subject to the terms and entitled
to the benefits of the Deposit Agreement dated as of October ____, 1996 (the
"Deposit Agreement"), among the Company, the Depositary and the holders from
time to time of Receipts for Depositary Shares. By accepting this Receipt, the
holder hereof becomes a party to and agrees to be bound by all the terms and
conditions of the Deposit Agreement. This Receipt shall not be valid or
obligatory for any purpose or entitled to any benefits under the Deposit
Agreement unless it shall have been executed by the Depositary by the manual or
facsimile signature of a duly authorized officer or, if a Registrar in respect
of the Receipts (other than the Depositary) shall have been appointed, by the
manual signature of a duly authorized officer of such Registrar.

Dated:
STATE STREET BANK AND TRUST COMPANY,
as Depositary, Transfer Agent and Registrar

Authorized Signatory

<PAGE> 26

[FORM OF REVERSE OF RECEIPT]

INDEPENDENT BANK CORPORATION

INDEPENDENT BANK CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH
REGISTERED HOLDER OF A RECEIPT WHO SO REQUESTS A COPY OF THE DEPOSIT AGREEMENT
AND A STATEMENT OR SUMMARY OF THE POWERS, DESIGNATIONS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF
STOCK OR SERIES THEREOF WHICH THE COMPANY IS AUTHORIZED TO ISSUE AND OF THE
QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR RIGHTS.
ANY SUCH REQUEST IS TO BE ADDRESSED TO THE DEPOSITARY NAMED ON THE FACE OF THIS
RECEIPT.

________________________________________________________

The following abbreviations when used in the instructions on the face
of this receipt shall be construed as though they were written out in full
according to applicable laws or regulations.

<TABLE>
<S><C>
TEN COM - as tenant in common UNIF GIFT MIN ACT - Custodian
--------------- ---------------
(Cust) (Minor)

TEN ENT - as tenants by the Under Uniform Gifts to Minors Act
entireties

JT TEN - as joint tenants with
right of survivorship
and not as tenants in -------------------------------------------------------
common (State)
</TABLE>

Additional abbreviations may also be used though not in the above list.

ASSIGNMENT

For value received, __________________________ hereby sell(s), assign(s) and
transfer(s) unto

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

______________________________________________________________________

______________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE

______________________________________________________________________

_____________________________________________ Depositary Shares represented by
the within Receipt, and do hereby irrevocably constitute and appoint
_____________________________________________ Attorney to transfer the said
Depositary Shares on the books of the within named Depositary with full power
of substitution in the premises.

Date________________________ __________________________________________
NOTICE: The signature to the assignment
must correspond with the name as
written upon the face of this
Receipt in every particular,
without alteration or enlargement
or any change whatever.

<PAGE> 1

EXHIBIT 10(g)

AGREEMENT TO PURCHASE ASSETS

AND ASSUME LIABILITIES

BY AND BETWEEN

FIRST OF AMERICA BANK-MICHIGAN,
NATIONAL ASSOCIATION

AND

INDEPENDENT BANK EAST MICHIGAN
<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
ARTICLE ONE: PURCHASE OF ASSETS, REAL ESTATE
AND ASSUMPTION OF DEPOSIT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

1.1 Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

ARTICLE TWO: CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

2.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Payment for Assets and Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Fiduciary Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.6 Names and Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Transitional Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.9 Post-Closing Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ARTICLE THREE: THE BANK'S
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

3.1 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Governmental Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

ARTICLE FOUR: SELLER'S
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

4.1 Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.2 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.3 Governmental Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.5 Proceedings Relating to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6 Taxes, Insurance and Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.7 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.8 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.9 Employee Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.11 Deposit Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>

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<TABLE>
<S> <C>
4.12 Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.13 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.14 Advice of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.15 Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.16 Title to Property, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.17 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.18 Change in Business Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

ARTICLE FIVE: COVENANTS OF THE BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

5.1 Conduct of Business; Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 Required Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.4 Use of SELLER'S Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.5 Best Efforts to Satisfy Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ARTICLE SIX: COVENANTS OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

6.1 Access to Records and Information; Personnel; Customers . . . . . . . . . . . . . . . . . . . 13
6.2 Conduct of Business; Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Employee Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.6 Assistance in Obtaining Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . 15
6.7 Real Estate, Title, and Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8 Transfer of Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.9 Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.10 Best Efforts to Satisfy Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.12 Installation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.13 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.14 Inspection of Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

ARTICLE SEVEN: CONDITIONS PRECEDENT TO
SELLER'S OBLIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

7.1 Compliance by the BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.2 Renewal of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.3 Delivery of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.4 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>

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ARTICLE EIGHT: CONDITIONS PRECEDENT
TO THE BANK'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

8.1 Regulatory Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.2 Compliance by SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.3 Renewal of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 20
8.4 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.5 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.6 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.7 Wire Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE NINE: TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

9.1 Termination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

ARTICLE TEN: EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

10.1 The BANK'S Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
10.2 SELLER'S Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
10.3 Brokers' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

ARTICLE ELEVEN: OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

11.1 Backup Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.2 IRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.3 Interest Reporting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
11.4 Pre-Closing Notices to Depositors . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.5 Post Closing Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.6 Post Closing Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
11.7 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

ARTICLE TWELVE: INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

12.1 Indemnification of the BANK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.2 Indemnification of SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
12.3 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . 24
12.4 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

ARTICLE THIRTEEN: AMENDMENT, WAIVER AND NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . 25

13.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
13.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>

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ARTICLE FOURTEEN: GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

14.1 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
14.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
14.3 Method of Consent or Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
14.4 Public Announcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
14.5 No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
14.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
14.7 Reliance on Headings, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
14.8 Severability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>

EXHIBIT A Conveyed Real Estate Legal Description

EXHIBIT B Assignment and Assumption of Accounts Agreement

EXHIBIT C Assignment and Assumption of Loans and Loan Agreement

EXHIBIT D Assignment and Assumption of Contracts

EXHIBIT E Assignment, Transfer, and Appointment of Successor Trustee for
Individual Retirement Accounts

EXHIBIT F Bill of Sale

SCHEDULE I Commercial Loans

SCHEDULE II Personal Property

SCHEDULE III Assigned Contracts

SCHEDULE IV Deposits

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AGREEMENT TO PURCHASE ASSETS
AND ASSUME LIABILITIES

THIS AGREEMENT TO PURCHASE ASSETS AND ASSUME LIABILITIES ("Agreement") is
made and entered into this 18th day of September, 1996 by and between FIRST OF
AMERICA BANK-MICHIGAN, NATIONAL ASSOCIATION (the "SELLER"), a national banking
association with its headquarters located at 108 East Michigan Avenue,
Kalamazoo, Michigan 49007 and INDEPENDENT BANK EAST MICHIGAN (the "BANK"), a
Michigan state banking corporation with its headquarters located at 1111 West
Caro Road, Caro, Michigan 48723.

WITNESSETH

WHEREAS, SELLER owns and operates branch offices located at 305 East Huron
Avenue, Bad Axe, Michigan; 6727 Main Street, Caseville, Michigan; 47 North Main
Street, Elkton, Michigan; 25 West Kinde Road, Kinde, Michigan; 4495 Garfield,
Ubly, Michigan; 655 North Port Crescent, Bad Axe, Michigan; 1 West Main Street,
Sebewaing, Michigan; and 4761 State Street, Gagetown, Michigan (the "Branch
Offices").

WHEREAS, SELLER desires to sell and the BANK desires to acquire and operate
the Branch Offices, and, in that regard, SELLER desires to sell and the BANK
desires to acquire certain assets related thereto, including certain loans
maintained at the Branch Offices.

WHEREAS, SELLER desires to transfer and the BANK desires to assume certain
deposit accounts maintained at or for the Branch Offices and certain other
liabilities pertaining to the continuing operations thereof.

NOW, THEREFORE, in consideration of the premises and agreements herein
contained, and for other consideration the receipt and sufficiency of which are
hereby acknowledged, the BANK and SELLER agree as follows:

ARTICLE ONE: PURCHASE OF ASSETS, REAL ESTATE
AND ASSUMPTION OF DEPOSIT LIABILITIES

1.1 Purchased Assets. For the consideration, in the manner and upon the
terms and conditions hereinafter set forth, SELLER hereby agrees to sell,
convey, transfer and assign to the BANK and the BANK hereby agrees to accept and
assume from SELLER, as of the close of business on the Closing Date (as
hereinafter defined), certain assets relating to the Branch Offices (the
"Assets") as follows:

A. Real Estate. All of SELLER'S interest in the real estate located
at 305 East Huron Avenue, Bad Axe, Michigan; 6727 Main Street, Caseville,
Michigan; 47 North Main Street, Elkton, Michigan; 25 West Kinde Road,
Kinde, Michigan; 4495 Garfield, Ubly, Michigan; 655 North Port Crescent,
Bad Axe, Michigan; 1 West Main

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<PAGE> 7

Street, Sebewaing, Michigan; and 4761 State Street, Gagetown, Michigan,
more particularly described in Exhibit A hereto (the "Real Estate").

B. Cash. All cash on hand at the Branch Offices as of the close of
business on the Closing Date ("Cash on Hand").

C. Loans. The commercial loans listed in Schedule I hereto (the
"Commercial Loans") and all loans secured by Deposit Liabilities (as
hereinafter defined) and account loans ("Account Loans" shall include
overdraft checking account loans) associated with the Branch Offices,
together with unpaid accrued interest thereon (the "Purchased Loans"). The
loans secured by deposit liabilities and Account Loans are collectively
referred to as "Deposit-Related Loans." Notwithstanding the foregoing, the
Purchased Loans shall exclude (1) any Commercial Loan which is not properly
classified in attached Schedule I according to the eight point scale
utilized by SELLER, and (2) any Deposit-Related Loans as to which (i) the
documentation does not meet the usually and customary standards of the
banking industry; (ii) there is a material default or a reasonable doubt as
to the collectibility of amounts which may be or become due and owing; or
(iii) there is any pending or threatened litigation involving the loan or
the deposits securing the loan.

D. Personal Property. All furniture, equipment, fixtures, and other
tangible personal property, excluding signage located at the Branch
Offices, which is described in Schedule II to this Agreement (the "Personal
Property").

E. Books and Records. All books, records, files and other
documentation in the possession of SELLER directly relating to the Assets
and Assumed Liabilities, including the "Deposits" (as defined in Section
1.2) and the Purchased Loans.

The Real Estate and the Personal Property are being sold to the BANK on an
"as is" basis, except as otherwise stated in this Agreement.

1.2 Assumption of Liabilities. Upon the terms and subject to the
conditions hereinafter set forth and except as otherwise provided herein, SELLER
hereby agrees to transfer and assign, and the BANK hereby agrees to accept and
assume from SELLER, certain liabilities relating to the Branch Offices (the
"Assumed Liabilities") as follows:

A. Deposit Liabilities. All liabilities for payment of deposits
maintained at the Branch Offices as of the close of business on the Closing
Date, together with unpaid accrued interest thereon through the Closing
Date ("Deposits" or "Deposit Liabilities"), except for deposits which
cannot lawfully be transferred.

B. Assigned Contracts. All obligations of SELLER under any and all
contracts relating to the operation or maintenance of the Branch Offices
that are assignable by SELLER to the BANK and as are identified in Schedule
III hereto.

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<PAGE> 8

C. Unless BANK elects otherwise, excluded from the definition of
Deposits and Deposit Liabilities and from the scope of this Agreement are
all the following: (1) any deposits over which SELLER or its affiliates
will continue to have investment authority or discretion following the
Closing Date; or (2) negotiated certificates of deposit with governmental
or other institutional or commercial customers which at or before maturity
will have a balance (including principal and interest) of $100,000 or more
("Jumbo CDS") (collectively referred to as the "Excluded Deposits"). Prior
to the Closing, the BANK may, at its sole option, elect to assume some or
all of the Excluded Deposits. If the BANK elects to assume any Excluded
Deposit, those Excluded Deposits shall be included among the Deposit
Liabilities defined above. Selection of those Excluded Deposits which the
BANK desires to assume shall be completed and written notice thereof given
to SELLER not less than 40 days prior to the Closing Date, to permit
notices to customers to be sent if and as required by law, by contract with
the customers or as contemplated under this Agreement.

D. Escrow Accounts. All escrow accounts, if any, for the payment of
taxes, insurance, or other like payments with respect to the Purchased
Loans (collectively the "Escrows").

ARTICLE TWO: CLOSING

2.1 The Closing. The purchase and sale of the Assets, and transfer and
assumption of the Assumed Liabilities by the BANK hereunder shall be consummated
subject to the terms and conditions of this Agreement following a Closing (the
"Closing") to be held at the offices of SELLER, or such other location as the
parties may agree, on such date ("the Closing Date") which shall be such date
as the parties shall mutually agree upon. The transactions contemplated hereby
shall become effective at the close of business ("Effective Time") on the
Closing Date.

2.2 Purchase and Sale of Assets. On the Closing Date and subject to the
terms and conditions set forth in this Agreement, SELLER shall convey, assign,
and transfer to the BANK and the BANK shall purchase from SELLER all of SELLER'S
right, title, and interest in the Assets.

2.3 Assumption of Liabilities.

(a) On the Closing Date, subject to the terms and conditions set
forth in this Agreement, the BANK shall assume liability for the payment
and performance of SELLER'S obligations accruing after the Closing Date for
the Deposit Liabilities in accordance with the terms of such Deposit
Liabilities in effect on the Closing Date provided, however, nothing herein
shall preclude the BANK from thereafter changing the terms and conditions
of such Deposit Liabilities to the extent that it can do so in accordance
with the terms of the agreements with customers associated with the Deposit
Liabilities and in accordance with applicable law.

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<PAGE> 9

(b) On the Closing Date, the BANK will assume the obligations of
SELLER with respect to the Purchased Loans and the Assigned Contracts and
obligations of SELLER to provide services incidental to the Branch Offices
and the assumption of the Deposit Liabilities accruing after the Closing
Date in accordance with the terms thereof.

2.4 Payment for Assets and Assumption of Liabilities. On the Closing Date,
SELLER shall pay to the BANK, by wire transfer in immediately available funds to
an account designated by the BANK, the amount of the Deposit Liabilities and the
Escrows as estimated as of the close of business on the third day immediately
preceding the Closing Date (the "Estimation Date") plus the amount of the
unearned fees associated with letters of credit included in the Purchased Loans
(prorated to the Closing Date) plus the net amount of any prorated items
required by Section 2.7 hereof owed by SELLER to the BANK and less the sum of:
(a) the amount of all Cash on Hand as of the close of business on the Estimation
Date; (b) the net amount of any prorated items required by Section 2.7 hereof
owed by the BANK to SELLER; (c) the net book value as of the close of business
on the Estimation Date of the Personal Property; (d) the net book value as of
the Estimation Date of the Purchased Loans; (e) the "Purchased Loan Premium"
which shall equal the product of the Purchased Loans listed in Schedule I as of
the Estimation Date multiplied by 1% (0.01); (f) the "Deposit Premium," which
shall equal the product of the amount of the Deposit Liabilities as of the
Estimation Date multiplied by 6.875% (0.06875); and (g) the net book value as of
the close of business on the Estimation Date of the Real Estate. The BANK and
SELLER shall agree in writing upon the allocation of such amount among various
categories of assets being acquired by the BANK. The BANK and SELLER agree to
be bound by the allocation for all purposes, including reporting to the Internal
Revenue Service under Section 1060 of the Internal Revenue Code, as amended
("IRC").

2.5 Fiduciary Relationships. As and to the extent legally permissible,
the BANK shall assume all of the fiduciary relationships of SELLER arising out
of any Individual Retirement Account ("IRA") included in the Deposit
Liabilities, and with respect to such accounts, the BANK shall succeed to all
such fiduciary relationships of SELLER as fully and to the same extent as if the
BANK had originally acquired, incurred, or entered into such fiduciary
relationships.

2.6 Names and Marks. SELLER is not selling, assigning, conveying,
transferring or delivering, nor shall the BANK acquire, any rights or interest
in or to: (a) the name "First of America" or any derivation thereof; or (b) any
logos, service marks or trademarks, advertising materials or slogans or any
similar items used by SELLER in connection with its business.

2.7 Prorations. The Federal Deposit Insurance Corporation ("FDIC")
premium with respect to the Deposit Liabilities for the quarterly assessment
period in which the Closing Date occurs, all taxes associated with the Real
Estate, assessments, utility payments, payments due on Assigned Contracts, and
similar expenses related to the Assets transferred

4
<PAGE> 10

hereunder shall be prorated between the parties on the basis of a 30-day month
and 360-day year as of the Closing Date. Taxes shall be prorated as though all
tax bills which are received in a particular year are payable for that calendar
year. The FDIC premium shall be prorated as though all of the Deposit
Liabilities are insured as Savings Association Insurance Fund ("SAIF")
deposits. Any items susceptible of being prorated but which cannot be prorated
by the Closing Date shall be prorated as soon as the requisite information
becomes available. Such adjustments after the Closing Date shall take place at
a mutually agreeable time and place within twenty (20) business days of the
Closing Date.

2.8 Transitional Matters.

(a) During the ninety (90) day period following the Closing Date, the
BANK shall pay, in accordance with law and customary banking practices, all
properly drawn and presented checks, and automated clearinghouse debits and
credits, ATM deposits and withdrawals, drafts and withdrawal orders
presented to the BANK by mail, over the counter through the check clearing
system of the banking industry, by depositors of the Deposit Liabilities on
checks, drafts or withdrawal order forms provided by SELLER, and in all
other respects, to discharge, in the usual course of the banking business,
the duties and obligations of SELLER with respect to the balances due and
owing to the depositors whose deposits are assumed by the BANK.

(b) If any of the depositors of the Deposit Liabilities, instead of
accepting the obligations of the BANK to pay the Deposit Liabilities, shall
demand payment from SELLER for all or any part of any of the Deposit
Liabilities, SELLER may make such payment. If any of such depositors draws
a check, has or makes an automated clearinghouse generated debit with
respect to his or her account, makes an ATM withdrawal, draft or withdrawal
order against the Deposit Liabilities, including accrued interest, assumed
from SELLER, which is presented or charged to SELLER within thirty (30)
days after the Closing Date, SELLER may pay the same and the BANK will
reimburse SELLER for any such payment or charges provided there are
sufficient funds in the depositor's account. The BANK and SELLER shall
settle within twenty-four (24) hours any such deposits PAID by SELLER and
any checks, drafts or orders of withdrawal presented by SELLER to the BANK
so long as presentment is made by 3:00 p.m. on the day of presentment of
such item by the depositor whose account is being assumed by the BANK. In
order to reduce the continuing charges to SELLER through the check clearing
system of the banking industry which will result from check forms of SELLER
being used after the Closing Date by the depositors whose accounts are
assumed, the BANK agrees, at its sole cost and expense, and without charge
to such depositors, to notify such depositors, as soon as practicable after
the Closing Date, of the BANK'S assumption of the Deposit Liabilities and
to furnish each depositor with checks on the forms of the BANK, and with
instructions to utilize the BANK'S checks and to destroy unused checks of
SELLER.

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<PAGE> 11

(c) For a period of thirty (30) days after the Closing Date, SELLER
(within thirty (30) hours of receipt thereof) shall deliver to the BANK a
detailed list of checks presented to SELLER for payment which are drawn on
accounts which are included in the Deposit Liabilities. Within forty-eight
(48) hours, SELLER shall deliver to the BANK the checks detailed on such
lists. The BANK will reimburse SELLER for its expenses reasonably incurred
in the performance hereof. This subsection shall not be deemed to
authorize SELLER to act as the BANK'S agent to accept or take any action
with respect to such checks.

(d) Any direct deposits by or for the benefit of a depositor having
an account included in the Deposit Liabilities received by SELLER shall be
delivered to the BANK by the date which such deposit is required to be
credited to the customer's account. A wire transfer of the deposited funds
shall be acceptable for purposes of this subsection. This subsection shall
not be deemed to authorize SELLER to act as the BANK'S agent to accept or
take any other action with respect to such direct deposits.

(e) For a period of thirty (30) days after the Closing Date, any
payments on the account of the Purchased Loans received by SELLER shall be
delivered to the BANK within forty-eight (48) hours of SELLER'S receipt,
provided that this shall not be deemed to authorize SELLER to act as the
BANK'S agent to accept or take any other action with respect to such loan
payments.

(f) If at the Effective Time there exists a negative balance in a
deposit account, that account will be transferred to the BANK and that
negative balance will be netted against other positive balances in
aggregating total Deposit Liabilities for all transferred accounts. If on
or before the twentieth (20th) business day following the Closing Date the
customer has not deposited sufficient money to cover that negative balance,
then upon the BANK'S request, SELLER shall reimburse the BANK for that
amount (to be effected as part of the Adjustment Payment contemplated in
Section 2.9 below) in exchange for the BANK'S assignment to SELLER of the
BANK'S claim against the customer. SELLER'S reimbursement shall be limited
to the amount of the negative balance in the account at the Effective Time,
less any deposits to the account after the Effective Time and prior to the
twentieth (20th) day following the Closing Date.

2.9 Post-Closing Adjustments. Within twenty (20) business days after the
Closing Date ("Adjustment Payment Date"), the parties shall make an appropriate
post-closing adjustment payment (the "Adjustment Payment"), consistent with the
express terms of this Agreement with respect to the Deposit Liabilities,
prorated items owed by either party and all items listed in Subparagraphs (a),
(b), (c), (d), (e), (f) and (g) of Section 2.4 determined as of the close of
business on the Closing Date. The Adjustment Payment shall be paid by wire
transfer to the previously designated accounts, by SELLER or by the BANK, on or
before the Adjustment Payment Date. Interest on the amount of the Adjustment
Payment for the period from the Closing Date to the Adjustment Payment Date
shall be due to the party

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<PAGE> 12

receiving the Adjustment Payment. Interest shall be calculated at a rate equal
to the average of the high and low bids for Federal Funds (on the basis of a
360-day year) as reported in The Wall Street Journal on the Closing Date, or,
if none, on the date immediately prior to the Closing Date on which such bids
were reported in The Wall Street Journal.

ARTICLE THREE: THE BANK'S
REPRESENTATIONS AND WARRANTIES

The BANK represents and warrants to SELLER as follows:

3.1 Authority Relative to this Agreement. The execution, delivery and
performance of this Agreement by the BANK have been duly authorized and approved
by all necessary corporate action on the part of the BANK, and this Agreement is
legally binding and enforceable against the BANK in accordance with its terms.
This Agreement and the transactions contemplated hereby do not and will not
violate any of the provisions of, or constitute a default under: (a) the Charter
or Bylaws of the BANK; or (b) any other material agreement, commitment or
instrument to which the BANK is a party or by which any of its properties or
assets are bound.

3.2 Organization and Good Standing. The BANK is a state bank duly
organized, validly existing and in good standing under the laws of the State of
Michigan and all of its deposits are insured by the FDIC through the Bank
Insurance Fund ("BIF") or SAIF and it has the corporate power to carry on its
business as it is now being conducted and to consummate the transactions
contemplated by this Agreement. The Bank acknowledges and agrees that all of
the Deposit Liabilities being transferred to the Bank by Seller pursuant to this
Agreement will upon transfer be deemed by the FDIC to be insured through SAIF
and will be required to be maintained as SAIF deposits by the Bank.

3.3 Governmental Notices. The BANK has received no notice from any
federal, state, or other governmental agency indicating that such agency would
oppose or not grant or issue its consent or approval, if required, with respect
to the transactions contemplated hereby.

3.4 Litigation. There is no action, suit, or proceeding pending against
the BANK or, to the knowledge of the BANK, threatened against or affecting the
BANK before any court or arbitrator or any governmental body, agency, or
official which could materially adversely affect the ability of the BANK to
perform its obligations under this Agreement or which in any manner questions
the validity of this Agreement.

3.5 Other Information. To its knowledge, no representation or warranty by
the BANK contained in this Agreement, or disclosure by the BANK in any
certificate or other instrument or document furnished or to be furnished by or
on behalf of the BANK pursuant to this Agreement, and no information furnished
or to be furnished by the BANK for use in

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<PAGE> 13

applications to various regulatory authorities contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact required to be stated herein or therein or which is necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were or are made, not misleading in any material respect.

3.6 Advice of Changes. Between the date hereof and the Closing Date, the
BANK shall promptly advise SELLER in writing of any fact which, if existing or
known as of the date hereof, would have been required to be set forth or
disclosed in or pursuant to this Agreement or of any fact which, if existing or
known as of the date hereof, would have made any of the representations
contained herein untrue in any material respect.

ARTICLE FOUR: SELLER'S
REPRESENTATIONS AND WARRANTIES

SELLER represents and warrants to the BANK as follows:

4.1 Authority Relative to this Agreement. The execution, delivery and
performance of this Agreement by SELLER have been duly authorized and approved
by all necessary corporate action on the part of SELLER, and this Agreement is
legally binding and enforceable against SELLER in accordance with its terms.
This Agreement and the transactions contemplated hereby do not and will not
violate any of the provisions of, or constitute a default under: (a) the
Articles of Association or Bylaws of SELLER; or (b) any other material
agreement, commitment or instrument to which SELLER is a party or by which any
of its properties or assets are bound.

4.2 Organization and Good Standing. SELLER is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States and all of its deposits are insured by the FDIC through BIF
or SAIF and it has corporate power to carry on its business, including the
business of the Branch Offices, as it is now being conducted and to consummate
the transactions contemplated by this Agreement. SELLER has fully paid all
deposit insurance assessments presently due and payable with respect to the
Deposit Liabilities and this deposit insurance is presently in full force and
effect.

4.3 Governmental Notices. SELLER has received no notice from any federal,
state, or other governmental agency indicating that such agency would oppose or
not grant or issue its consent or approval, if required, with respect to the
transactions contemplated hereby.

4.4 Litigation. There is no action, suit, proceeding or investigation of
any nature pending, or to the knowledge of SELLER, threatened against or
affecting SELLER before any court or arbitrator or any governmental body,
agency, or official or otherwise that challenges the validity or legality of the
transactions contemplated by this Agreement or which would adversely affect the
Assets or the Branch Offices or which could materially adversely affect the
ability of SELLER to perform its obligations under this Agreement.

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<PAGE> 14

4.5 Proceedings Relating to Properties. No proceedings to take all or any
part of the Real Estate by condemnation or right of eminent domain are pending
or, to the best of SELLER'S knowledge, threatened and SELLER'S use of the Real
Estate is not, and no complaints have been received by SELLER that SELLER is, in
violation of applicable building, zoning, safety or similar laws, ordinances or
regulations. There are no special or general assessments pending against or
affecting the Real Estate, and, to the best of SELLER'S knowledge, no public
improvements have been recently made which would cause special or general
assessments to be assessed against the Real Estate. Except for any encroachment
which does not materially affect the use or value of the premises: (a) to the
best of SELLER's knowledge, there is no encroachment upon the Real Estate from
any buildings or improvements, if any, located on the adjacent property; and (b)
to the best of SELLER's knowledge, there is no encroachment by the Real Estate
upon any adjacent property or upon any easements with respect to the adjacent
property. There are no leases or other agreements by which any person possesses
or has a right to possess all or any portion of the Real Estate other than those
described in this Agreement or exhibits to this Agreement. To the best of
SELLER's knowledge, and except as disclosed by title insurance binder or by
survey, there is no violation of any applicable building restriction or
restrictive covenant. To the best of SELLER's knowledge, the Real Estate is
adequately serviced by all utilities necessary for effective operation as
presently used for a financial institution office.

4.6 Taxes, Insurance and Utilities. SELLER has paid all property, excise,
sales and use and other taxes imposed by any taxing authority which are due and
payable, and there are no unpaid taxes which could result in liens being placed
on the Assets or the Deposit Liabilities. SELLER shall maintain in full force
and effect through the Closing Date its present insurance coverage as it relates
to the Assets. SELLER shall pay all utilities through the Closing Date. SELLER
has duly and timely withheld and paid to the appropriate governmental agencies
all withholding taxes, including any related penalties, interest and
deficiencies, relating to the payment of interest, earnings or dividends on the
deposit liabilities. For all completed years, SELLER has duly and timely sent
to each account holder with respect to the Deposit Liabilities an Internal
Revenue Service Form 1099 (or a substitute form permitted by law) relating to
the interest, earnings or dividends paid on the Deposit Liabilities for those
periods.

4.7 Financial Statements. The financial information and all other
information supplied or to be supplied by SELLER to the BANK in connection with
the transactions contemplated hereby is or will be true and complete and fairly
represent the information set forth therein as of the dates and for the periods
specified therein (subject, with respect to statements covering a portion of a
year, to normal year-end adjustments and accruals).

4.8 Compliance with Law. The business and operations of the Branch
Offices have been and are being conducted in accordance with all applicable
laws, rules, and regulations of all authorities, including, without limitation,
all regulations pertaining to the receipt of customer information required by
state and federal law concerning taxpayer identification numbers, social
security numbers and the like, laws and regulations concerning

9
<PAGE> 15

truth-in-lending, truth-in-savings, usury, fair credit reporting, consumer
protection, occupational safety, civil rights, employee protection, fair
employment practices, and fair labor standards; and insurance laws.

4.9 Employee Contracts. There are no employment contracts between SELLER
and any of the Employees (as that term is hereinafter defined) not terminable on
thirty (30) days' notice or less after the Closing Date. SELLER is not a party
to any contract or arrangement with any union relating to the business conducted
at the Branch Offices and SELLER is not aware of any pending organizational
efforts at the Branch Offices. To the best of its knowledge, there has been no
indication to SELLER that a union organizational effort or labor disturbance is
likely at the Branch Offices prior to the Closing Date.

4.10 Forms. Within thirty (30) days from the date of this Agreement,
SELLER will provide the BANK with copies of the forms of signature cards,
deposit account forms, Regulation E disclosures, Truth-in-Savings disclosures,
deposit account agreements, and IRA trust agreements and beneficiary
designations, as well as the forms of any other instruments or agreements
presently in use at the Branch Offices in connection with the Deposit
Liabilities. For purposes of this Section 4.10, all referenced documents shall
be the forms used by SELLER as of the date of this Agreement for new customers.

4.11 Deposit Liabilities. During the period of SELLER'S operation of the
Branch Offices, SELLER has properly accrued interest on the Deposit Liabilities
and, to the best of SELLER'S knowledge, the records respecting the Deposit
Liabilities accurately reflect such accruals of interest. A listing of all
deposits at the Branch Offices as of July 31, 1996, is included in Schedule IV
to this Agreement.

4.12 Loans. The Purchased Loans are evidenced by promissory notes or
other evidences of indebtedness which, with all ancillary security documents,
constitute valid and binding obligations of SELLER and, to the best of SELLER'S
knowledge, each of the other parties thereto, enforceable in accordance with
their terms, except as limited by applicable bankruptcy, insolvency, moratorium
or other similar laws affecting the enforcement of creditors' rights and
remedies generally from time to time in effect and by applicable laws which may
affect the availability of equitable remedies.

4.13 Other Information. No representation or warranty by SELLER contained
in this Agreement, or disclosure by SELLER in any certificate or other
instrument or document furnished or to be furnished by or on behalf of SELLER
pursuant to this Agreement, and no information furnished or to be furnished by
SELLER for use in applications to various regulatory authorities contains or
will contain any untrue statement of a material fact or omits or will omit to
state any material fact required to be stated herein or therein or which is
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were or are made, not misleading in any material
respect.

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<PAGE> 16

4.14 Advice of Changes. Between the date hereof and the Closing Date,
SELLER shall promptly advise the BANK in writing of any fact which, if existing
or known as of the date hereof, would have been required to be set forth or
disclosed in or pursuant to this Agreement or of any fact which, if existing or
known as of the date hereof, would have made any of the representations
contained herein untrue in any material respect.

4.15 Absence of Material Adverse Change. Since July 31, 1996, or such
earlier date stated in and with respect to information in the bid package, there
has been no material adverse change in the business, properties, operations or
prospects with respect to the Branch Offices. No facts or circumstances have
been discovered from which it reasonably appears that there is a significant
risk that there will occur a material adverse change in the business,
properties, operations or prospects of the Branch Offices.

4.16 Title to Property, etc. SELLER has and, upon consummation of this
transaction will have transferred to Buyer, good and marketable title to each of
the Assets free and clear of any mortgages, liens, encumbrances, charges,
easements or restrictions of any kind whatsoever other than (i) beneficial
easements and restrictions of record which will not impair the BANK's intended
use of the Property, and (ii) such easements or restrictions as may be
specifically approved in writing by the BANK. No claims or allegations have
been made or threatened which, if substantiated, would make the foregoing
representation and warranty untrue in any respect.

4.17 Environmental Matters. All of the following representations and
warranties are subject to matters disclosed in the Phase I Report (as
hereinafter defined). There are no material actions, suits, investigations,
liabilities, inquiries or other proceedings, rules, orders or citations
involving the Branch Offices, pending or, to the knowledge of SELLER threatened,
as a result of any failure of SELLER or any predecessor to SELLER to comply with
any requirement of federal, state, local or foreign law, civil or common, or
regulation relating to air, water, soil, solid waste management, hazardous or
toxic substances, or the protection of health or the environment, nor is there,
to the knowledge of SELLER any basis for any of the foregoing. None of the Real
Estate of the Branch Offices is, to the best knowledge of SELLER, contaminated
with any waste or hazardous substances. To the knowledge of SELLER, with
respect to the Branch Offices, SELLER is not and may not be deemed to be an
"owner or operator" of a "facility" or "vessel" which owns, possesses,
transports, generates or disposes of a "hazardous substance," as those terms are
defined in Section 9601 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 USCA Section 9601, et seq. SELLER
has no knowledge of any material environmental defect in or associated with the
Branch Offices or the Real Estate and has no knowledge of any condition existing
thereon which to its knowledge and belief would give rise to liability of the
BANK under federal, state or local environmental laws and regulations. SELLER
has not received notification from any person that any hazardous substances
defined under Section 104(4) of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, has been disposed of, buried
underneath, percolated

11
<PAGE> 17

beneath or otherwise exists on the Real Estate or that it is a "potentially
responsible party" as defined under the above mentioned statute.

4.18 Change in Business Relationships. Except as contemplated by this
Agreement, SELLER has no knowledge, whether on account of this transaction or
otherwise, that: (a) any customer, agent, representative, or supplier of SELLER
with respect to the Branch Offices intends to discontinue, diminish, or change
its relationship with SELLER or the Branch Offices, the effect of which would be
material to the business of the Branch Offices; or (b) any person employed at a
Branch Office has given notice to SELLER's human resources officer that he or
she intends to terminate his or her employment during the twelve (12) months
following the date of this Agreement

ARTICLE FIVE: COVENANTS OF THE BANK

The BANK hereby covenants and agrees with SELLER as follows:

5.1 Conduct of Business; Certain Covenants. From and after the execution
and delivery of this Agreement and until the Closing Date, the BANK will: (a)
conduct its business and operate only in accordance with sound banking and
business practices; and (b) remain in good standing with all applicable banking
regulatory authorities.

5.2 Confidentiality. The BANK will cause all internal, nonpublic
financial and business information obtained by it from SELLER or otherwise to be
treated confidentially (exercising the same degree of care as it uses to
preserve and safeguard its own confidential information); provided, however,
that notwithstanding the foregoing, nothing contained herein shall prevent or
restrict the BANK from making such disclosure thereof as may be required by law
or as may be required in the performance of this Agreement. If the transactions
contemplated hereby shall not take place, all nonpublic financial statements,
documents and other materials of SELLER and all copies thereof shall be returned
to SELLER and shall not thereafter be used by the BANK.

5.3 Required Approvals. As soon as practicable after the execution of
this Agreement, the BANK shall at its expense: (a) submit applications with the
FDIC and the Michigan Financial Institutions Bureau for permission to acquire
the Deposit Liabilities and to establish branch offices at the locations at
which the Branch Offices are located; and (b) prepare and submit for filing any
and all other applications, filings, and registrations with, and notification
to, all federal and state authorities required on the part of the BANK for the
transactions described in this Agreement to be consummated. Thereafter, the
BANK shall pursue all such applications, filings, registrations, and
notifications diligently and in good faith, and shall file such supplements,
amendments, and additional information in connection therewith as may be
reasonably necessary for the transactions contemplated herein to be consummated.
The BANK shall deliver to SELLER, as soon as is reasonably practicable after the
filing thereof, copies of each and all of such applications, filings,
registrations, and notifications (except for any portions thereof deemed
confidential by the BANK), and any

12
<PAGE> 18

supplement, amendment, or item of additional information in connection
therewith (except for any portions thereof deemed confidential by the BANK).
The BANK shall also deliver promptly to SELLER a copy of each material notice,
order, opinion, and other item of correspondence received by the BANK from such
federal and state authorities (except for any portions thereof deemed
confidential by the BANK) and shall advise SELLER, at SELLER'S request, of
developments and progress with respect to such matters.

5.4 Use of SELLER'S Name. On and after the Closing Date, the BANK shall
not use the name of SELLER in any manner in connection with the operation of the
Branch Offices. No activity conducted by the BANK on or after the Closing Date
shall state or imply that SELLER is in any way involved as a partner, joint
venturer or otherwise in the business of the BANK.

5.5 Best Efforts to Satisfy Conditions. The BANK covenants with and
agrees that it: (a) will use its best efforts to satisfy the conditions to which
the obligations of SELLER are subject pursuant to this Agreement on or prior to
the Closing Date; and (b) will fully cooperate to facilitate the consummation of
the transactions contemplated by this Agreement, including but not limited to
the operational aspects of the transfer of the Deposit Liabilities and the
change of signage.

5.6 Further Assurances. On and after the Closing Date, the BANK shall
give such further assurances to SELLER and, upon SELLER'S request, shall
execute, acknowledge and deliver all such acknowledgments and other instruments
and take such further action as may be necessary and appropriate to effectively
relieve and discharge SELLER from any obligations remaining under the Deposit
Liabilities.

ARTICLE SIX: COVENANTS OF SELLER

SELLER hereby covenants and agrees with the BANK as follows:

6.1 Access to Records and Information; Personnel; Customers. Between the
date of this Agreement and the Closing Date, SELLER shall afford to the BANK and
its authorized agents and representatives access, during normal business hours
and upon reasonable notice, to the properties, operations, books, records,
contracts, documents and other information of or relating to the Branch Offices.
If such books, records, contracts, documents or other information is not located
at the Branch Offices, SELLER, upon the BANK'S request, will make the same (or
copies thereof) available at the Branch Offices to the extent it is reasonably
practicable to do so. SELLER shall cause its personnel to provide assistance in
the BANK'S investigation of matters relating to the Branch Offices; provided,
however, that the BANK'S investigation shall be conducted in a manner which does
not unreasonably interfere with SELLER'S normal operations, customers and
employee relations and provided further that the right of access and examination
granted hereby is subject to the requirements of financial privacy laws or
similar laws relating to account holders and other records.

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<PAGE> 19

6.2 Conduct of Business; Certain Covenants. From and after the execution
and delivery of this Agreement and until the Closing Date, SELLER will: (a)
conduct the business of the Branch Offices only in the usual and ordinary course
of business; (b) retain all necessary business permits, licenses, registrations
and authorizations relating to the Branch Offices; and (c) use its best efforts
to maintain all existing contracts, customers, account relationships and all
other customer agreements, relationships and business of the Branch Offices.

6.3 Employee Matters. Beginning after a date mutually agreed by SELLER
and the BANK but not later than thirty (30) days prior to the Closing Date, the
BANK shall have the right to discuss with any or all employees of the Branch
Offices the possibility of their employment by the BANK after the Closing Date.
On or before the Closing Date, SELLER shall notify in writing all employees of
the Branch Offices (the "Employees") that the business of SELLER has been or
will be transferred to the BANK and that the BANK may offer to employ,
effective on the day following the Closing Date, such Employees as it at its
sole discretion so elects on terms and conditions of employment established by
the BANK. As of the Closing Date, all Employees that the BANK elects to hire
shall be discharged by the SELLER. SELLER shall be solely responsible for its
obligations to all discharged Employees, whether or not such discharged
Employees are hired by the BANK. Nothing contained herein shall preclude SELLER
from permitting an employee who declines employment with the BANK from accepting
another position with SELLER provided that SELLER has not encouraged such
employee to decline to accept such position with the BANK or to seek another
position with the SELLER. SELLER covenants with the BANK that prior to closing,
SELLER shall not, without the BANK's prior consent (i) increase the aggregate
full-time equivalent size of the work force at the Branch Offices above the
level existing at the date hereof or alter the composition of the work force at
the Branch Offices from the composition existing at the date hereof, (ii)
encourage any Employee to refuse an offer of employment by the BANK, (iii) enter
into any employment contract with any Employee, or (iv) increase the gross
annual compensation of any Employee pursuant to any evaluation other than in the
normal course of business. Notice of any increase in compensation for any
Employee shall be given to the BANK as soon as possible.

6.4 Negative Covenants. Except as may be required by regulatory
authorities, SELLER shall not, without the prior written consent of the BANK:
(a) transfer to SELLER'S other branches any of the Assets (it being understood
that any loans not being transferred pursuant hereto are not included in such
prohibition against transfer); (b) transfer to SELLER'S other branches any of
the Deposit Liabilities (it being understood that any deposits not being
transferred pursuant hereto are not included in such prohibition against
transfer) except upon the unsolicited request of a depositor in the ordinary
course of business; (c) transfer, assign, encumber or otherwise dispose of or
enter into any contract, agreement or understanding to transfer, assign,
encumber or otherwise dispose of any of the Assets except in the ordinary course
of business; (d) invest in any fixed assets or improvements to the Branch
Offices, except for improvements currently in progress; (e) enter into any
contract, commitment, lease or other transaction relating to the Branch Offices,
except in the ordinary

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<PAGE> 20

course of business that can be terminated upon notice of thirty (30) days or
less; or (f) offer interest rates on any deposit account at the Branch Offices
in excess of those interest rates paid on similar deposit accounts at SELLER's
other branches which are located in the same general area as the Branch
Offices.

6.5 Confidentiality. SELLER will cause all internal, nonpublic financial
and business information obtained by it from the BANK or otherwise to be treated
confidentially (exercising the same degree of care as it uses to preserve and
safeguard its own confidential information); provided, however, that
notwithstanding the foregoing, nothing contained herein shall prevent or
restrict SELLER from making such disclosure thereof as may be required by law or
as may be required in the performance of this Agreement. If the transactions
contemplated hereby shall not take place, all nonpublic financial statements,
documents and other materials of the BANK and all copies thereof shall be
returned to the BANK and shall not thereafter be used by SELLER in any way
detrimental to the BANK.

6.6 Assistance in Obtaining Regulatory Approvals. SELLER agrees to use
all reasonable efforts to assist the BANK in obtaining all regulatory approvals
necessary to complete the transactions contemplated hereby, and SELLER will
provide to the BANK or to the appropriate regulatory authorities all information
reasonably required to be submitted by the BANK in connection with such
approvals.

6.7 Real Estate, Title, and Surveys. At least thirty (30) business days
prior to the Closing Date, SELLER shall deliver to the BANK copies of the deeds
which it shall deliver for recordation on the Closing Date which shall be
general warranty deeds, subject only to Permitted Exceptions (as hereinafter
defined). SELLER will convey good and marketable title to the Real Estate to
the BANK subject to Permitted Exceptions. SELLER shall, at its expense, cause
to be delivered to the BANK as soon as is reasonably practicable after the date
hereof, commitments for title insurance from a nationally recognized title
company agreeable to the BANK and SELLER (the "Title Insurer") insuring the
title and interest of the BANK in and to the Real Estate (including without
limitation, all easements and rights appurtenant thereto), together with copies
of all exceptions to title to the Real Estate. In addition an as-built survey
of the Real Estate prepared by a licensed surveyor shall be provided to the BANK
by SELLER. The cost of the survey shall be borne equally by SELLER and the
BANK.

Unless the BANK notifies SELLER of objections to any exceptions shown on
the title commitments or of any unacceptable survey defects in writing within
twenty (20) days of receipt of the title commitment or survey, as the case may
be, all such exceptions or survey defects reflected therein shall be deemed
Permitted Exceptions. The term "Permitted Exceptions" shall also mean any or
all of the following: (i) those special exceptions acceptable to the BANK
including restrictions, easements, rights of way, leases, and encumbrances
referred to in the title commitment to be delivered by SELLER to the BANK
pursuant to this Agreement which individually or in the aggregate do not
materially interfere with the present or intended use of the Real Estate; and
(ii) statutory liens for current taxes or assessments not yet due, or if due not
yet delinquent, or the validity of which is being

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<PAGE> 21

contested in good faith by appropriate proceedings; and (iii) such other liens,
imperfections in title, charges, easements, restrictions, and encumbrances
which are not yet due and payable and which, individually and in the aggregate,
do not materially detract from the value of, or materially interfere with the
present or intended use of, the Real Estate.

If title commitments or surveys delivered pursuant to this Section 6.7
disclose title exceptions or survey defects other than Permitted Exceptions,
SELLER shall have forty-five (45) days from the date of receipt of notice
thereof (and the parties shall postpone the Closing Date, if necessary to enable
SELLER to undertake such activities) to have such exceptions or survey defects
cleared, or to have the title insurer commit to insure against loss or damage
that may be occasioned by such exceptions or survey defects by an endorsement in
form and substance satisfactory to the BANK. If the exceptions or survey
defects are not removed or endorsements over the exceptions or survey defects
are not obtained, the BANK, upon notice to SELLER within fifteen (15) days after
the expiration of the 45-day cure period, may elect (i) to terminate this
Agreement in which case this Agreement shall be null and void and the parties
shall be under no obligation to each other; or (ii) the BANK may elect to take
title notwithstanding the exceptions and such exception shall be deemed
Permitted Exceptions. SELLER shall be responsible for all real estate transfer
taxes.

6.8 Transfer of Data. Within forty-five (45) days of the execution of
this Agreement, SELLER shall provide to the BANK the tapes by which SELLER
proposes to transfer all data on the Deposit Liabilities. The format to be used
for transfer of data will be the format normally used by SELLER in the
electronic processing of its accounts. Any changes from the proposed format
shall be at the expense of the BANK.

6.9 Signs. SELLER shall, at its own expense, remove exterior signage
and the lettering and/or fascia of all interior signs from the Branch Offices.
SELLER agrees to remove such lettering and/or fascia from the Branch Offices on
or before the Closing Date or such other date as the parties may agree. SELLER
shall be responsible for all expenses incurred in patching or repairing the
surfaces surrounding the signs. SELLER shall not be responsible for expenses
incurred in connection with the construction or placement of any signs by the
BANK at the Branch Offices.

6.10 Best Efforts to Satisfy Conditions. SELLER covenants and agrees that
it: (a) will use its best efforts to satisfy the conditions to which the
obligations of the BANK are subject pursuant to this Agreement on or prior to
the Closing Date; and (b) will fully cooperate to facilitate the consummation of
the transactions contemplated by this Agreement including but not limited to the
operational aspects of the transfer of the Assets and the assumption of the
Deposit Liabilities and the change of signage.

6.11 Further Assurances. On and after the Closing Date, SELLER shall give
such further assurances to the BANK and, upon the BANK'S request, shall execute,
acknowledge and deliver all such acknowledgments and other instruments and take
such further action

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as may be necessary and appropriate to effectively transfer the Real Estate,
the other Assets, and the Deposit Liabilities to the BANK.

6.12 Installation. Following the receipt of all requisite regulatory
approvals or such earlier time as the parties may mutually agree, SELLER shall
allow the BANK and its representatives reasonable access to the Branch Offices
for the installation of telephone data transmission lines, security or alarm
devices, and other equipment in order to facilitate the transition of the
business conducted at the Branch Offices from SELLER to the BANK at the Closing.
BUYER shall not, however, unreasonably disrupt SELLER's operations in carrying
out these preparations. If for any reason this transaction is not consummated,
the BANK shall, at its expense, remove any such telephone lines and equipment
within a reasonable amount of time and restore, to the extent reasonably
practicable, the premises to its prior condition.

6.13 Covenant Not to Compete. SELLER hereby covenants and agrees that
following the consummation of this transaction and for a period of two (2) years
commencing as of the Closing Date:

(a) SELLER shall not establish, acquire, or operate any facilities
for the taking of deposits or the production of commercial loans within a
ten (10) mile radius of each of the Branch Offices (the "Protected
Territory"); and

(b) SELLER shall not solicit or directly communicate with respect to
deposit products with any person who is a customer with respect to the
Deposit Liabilities for the purpose of inducing such person to borrow or
deposit money or to purchase products or services from SELLER or any of its
affiliates.

This Section shall not preclude SELLER from making any communication: (i)
with any customer who, independent of any solicitation by SELLER subsequent to
the Closing Date, is or become SELLER's customer at a location other than a
Branch Office; (ii) with any customer who receives periodic statements from
SELLER with respect to any outstanding loan or deposit account owned or serviced
by or on behalf of SELLER after Closing; or (iii) by means of general
advertising or mass mailings or general solicitation which are not specifically
targeted to customers of a Branch Office. Additionally, this Section shall not
preclude SELLER from acquiring a financial institution which has existing
branches within the Protected Territory and shall neither apply to nor restrict
the solicitation by SELLER of public unit deposits (i.e., deposits by federal,
state, or local units of government, school districts, or governmental
agencies). For a period of one (1) year following the Closing Date, SELLER
shall not, without the BANK's written consent, solicit the employment by SELLER
of any Employee whom the BANK hires.

6.14 Inspection of Premises. Within twenty (20) business days after the
date of this Agreement, the BANK may inspect or cause to be inspected the
physical condition of the Real Estate and the Personal Property and give SELLER
written notice of any conditions which the BANK does not accept. Such
inspection may include, at the BANK'S election and expense,

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a Phase I environmental assessment. The BANK shall provide SELLER with a copy
of the environmental report prepared by its consultant (the "Phase I Report").
In the event that such notice is timely provided to SELLER, SELLER may either
elect to cure such conditions to the reasonable satisfaction of the BANK or
notify the BANK in writing within ten (10) days of the receipt of such notice
from the BANK of its election not to cure the same. In such event and in the
event that the BANK'S notice relates to a material environmental condition
affecting one or more Branch Offices, the BANK may elect to exclude the
affected Branch Office(s) from this transaction by providing written notice
thereof to SELLER within five (5) days of the receipt of SELLER'S notice. In
the event the BANK makes such election, the BANK shall nevertheless acquire the
Purchased Loans and assume the Deposit Liabilities associated with the affected
Branch Office(s). Alternatively, if SELLER elects not to cure any condition
identified in SELLER'S notice, the BANK may elect to terminate this Agreement
by providing written notice thereof to SELLER within five (5) days of the
receipt of SELLER'S notice. Failure to deliver any notice required hereby on a
timely basis shall constitute a waiver of any objections the BANK may have with
respect thereto. All other conditions of the Real Estate or Personal Property
shall be deemed accepted by the BANK. Except as to the extent that SELLER
otherwise expressly represents and warrants in Article Four, the Real Estate
and the Personal Property shall be transferred to the BANK in an "as is"
condition.

ARTICLE SEVEN: CONDITIONS PRECEDENT TO
SELLER'S OBLIGATIONS

All obligations of SELLER under this Agreement are subject to the
fulfillment (or waiver in writing by a duly authorized officer of SELLER), on or
before the Closing Date, of the following conditions:

7.1 Compliance by the BANK. All terms, covenants and conditions of this
Agreement to be complied with and performed by the BANK on or before the Closing
Date shall have been fully complied with and performed in all material respects.

7.2 Renewal of Representations and Warranties. The BANK'S
representations and warranties contained in this Agreement shall be deemed to
have been made again as of the Closing Date and, except as otherwise
contemplated by this Agreement, shall then be true in all material respects; and
the BANK shall have performed and complied with all material agreements,
conditions and covenants required by this Agreement to be performed or complied
with by the BANK prior to or at the Closing Date.

7.3 Delivery of Documents. The BANK shall have delivered the following
documents to SELLER:

(a) An Assignment and Assumption of Accounts Agreement in
substantially the form set forth in Exhibit B hereto.

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<PAGE> 24

(b) An Assignment and Assumption of Loans and Loan Agreement in
substantially the form of Exhibit C hereto.

(d) An Assignment, Transfer and Appointment of Successor Trustee for
Individual Retirement Accounts in substantially the form set forth in
Exhibit E hereto.

(e) Resolutions of the BANK'S Board of Directors, certified by its
Secretary or Assistant Secretary, authorizing the signing and delivery of
this Agreement and the consummation of the transactions contemplated
hereby.

(f) A certificate of the Secretary or Assistant Secretary of the
BANK as to the incumbency and signatures of officers.

(g) A certificate signed by a duly authorized officer of the BANK
stating that the conditions precedent to the obligations of SELLER pursuant
to this Agreement have been fulfilled.

7.4 Litigation. No action, suit, proceeding, or claim shall have been
instituted, made, or threatened by any person relating to the validity or
propriety of the transactions contemplated by this Agreement.

ARTICLE EIGHT: CONDITIONS PRECEDENT
TO THE BANK'S OBLIGATIONS

All obligations of the BANK under this Agreement are subject to the
fulfillment (or waiver in writing by a duly authorized officer of the BANK), on
or before the Closing Date (except with respect to those conditions requiring
satisfaction prior to the Closing Date), of each of the following conditions:

8.1 Regulatory Approvals. All required licenses, approvals and consents
of any relevant state, federal or other regulatory agencies necessary to permit
the BANK to consummate the transactions contemplated hereby shall have been
obtained with no requirements imposed upon the BANK which, in the BANK'S
reasonable judgment, are unduly burdensome.

8.2 Compliance by SELLER. All terms, covenants and conditions of this
Agreement to be complied with and performed by SELLER on or before the Closing
Date shall have been fully complied with and performed in all material respects.

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8.3 Renewal of Representations and Warranties. SELLER'S representations
and warranties contained in this Agreement shall be deemed to have been made
again as of the Closing Date and, except as otherwise contemplated by this
Agreement, shall then be true in all material respects; and SELLER shall have
performed and complied with all material agreements, conditions and covenants
required by this Agreement to be performed or complied with by SELLER prior to
or at the Closing Date.

8.4 Documents. SELLER shall have delivered the following documents to the
BANK:

(a) An Assignment and Assumption of Accounts Agreement in
substantially the form set forth in Exhibit B hereto.

(b) An Assignment and Assumption of Loans and Loan Agreements in
substantially the form of Exhibit C hereto.

(d) An Assignment, Transfer and Appointment of Successor Trustee for
Individual Retirement Accounts in substantially the form set forth in
Exhibit E hereto.

(e) A Bill of Sale in substantially the form set forth in Exhibit F
hereto.

(f) Instruments of conveyance satisfactory to legal counsel for the
BANK, together with the title commitments, title insurance, and the surveys
with respect to the Real Estate conveying the Real Estate to the BANK in
compliance with Section 6.7 of this Agreement.

(g) Such other bills of sale, assignments, and other instruments and
documents as counsel for the BANK may reasonably require as necessary or
desirable for transferring, assigning and conveying to the BANK good,
marketable and insurable title to the Assets pursuant to this Agreement.

(h) Resolutions of SELLER'S Board of Directors, certified by
SELLER'S Secretary or Assistant Secretary, authorizing the signing and
delivery of this Agreement and the consummation of the transactions
contemplated hereby.

(i) A certificate from the Secretary or Assistant Secretary of
SELLER as to the incumbency and signature of officers.

(j) A certificate signed by a duly authorized officer of SELLER
stating that the conditions precedent to the obligations of the BANK
pursuant to the Agreement have been fulfilled.

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(k) Listings of the Deposit Liabilities as of the Estimation Date
(the "Deposit Listings") on magnetic tape or utilizing such other method of
information transfer as the parties may mutually agree, which Deposit
Listing shall include account number, the outstanding principal balance,
and the accrued interest.

(l) All Books and Records capable of being delivered to the BANK.

8.5 Absence of Certain Changes or Events. From the date hereof to the
Closing Date, there shall be and have been no material adverse changes in the
Real Estate, the other Assets, the Deposit Liabilities, or otherwise in the
business, operations or condition of the Branch Offices.

8.6 Litigation. No action, suit, proceeding, or claim shall have been
instituted, made, or threatened by any person relating to the validity or
propriety of the transactions contemplated by this Agreement.

8.7 Wire Transfer. BUYER shall have received the wire transfer from
SELLER required by Section 2.4.

ARTICLE NINE: TERMINATION

9.1 Termination Provisions. This Agreement may be terminated at any time
prior to the Closing Date:

(a) Mutual Consent. By mutual consent of SELLER and the BANK;

(b) Conditions Precedent. By either SELLER or the BANK in the event
the conditions precedent to their own obligations as set forth in Articles
Seven and Eight have not been met and satisfied or waived or shall have
become impossible of fulfillment; or

(c) Elapsed Time. By either SELLER or the BANK if the Closing Date
does not occur before December 31, 1996, or such later date as the parties
may mutually agree upon.

ARTICLE TEN: EXPENSES

10.1 The BANK'S Expenses. The BANK will pay all expenses incurred by it
incident to obtaining requisite regulatory approvals to permit the BANK to
consummate the transactions contemplated hereby and all expenses incurred by it
incident to the consummation of the transactions contemplated hereby (including
legal and accounting fees and expenses incurred for legal and accounting
services rendered to the BANK in connection with the transactions contemplated
hereby).

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10.2 SELLER'S Expenses. SELLER will pay all expenses incurred by it
incident to permit SELLER to consummate transactions contemplated hereby
(including the title insurance policy, survey cost, recording fees, stamp taxes,
as well as legal and accounting fees and expenses incurred for legal and
accounting services rendered to SELLER in connection with the transactions
contemplated hereby).

10.3 Brokers' Fees. SELLER will pay, indemnify and save harmless the BANK
from and against any and all finders' fees, brokers' commissions or other
similar fees or expenses incurred by SELLER (or the BANK as a result of
understandings, agreements or arrangements made by SELLER) and arising out of or
in connection with the transactions contemplated hereby. The BANK will pay,
indemnify and save harmless SELLER from and against any and all finders' fees,
brokers' commissions or other similar fees or expenses incurred by the BANK (or
SELLER as a result of understandings, agreements or arrangements made by the
BANK) and arising out of or in connection with the transactions contemplated
hereby.

ARTICLE ELEVEN: OTHER AGREEMENTS

11.1 Backup Withholding. Any amounts required by any governmental
agencies to be withheld from any of the Deposit Liabilities (the "Withholding
Obligations") will be handled as follows:

(a) Any Withholding Obligations required to be remitted to the
appropriate governmental agency prior to the Closing Date will be withheld
and remitted by SELLER;

(b) Any Withholding Obligations required to be remitted to the
appropriate governmental agency on or after the Closing Date will be
remitted by the BANK. At the Closing, SELLER will remit to the BANK all
sums withheld by SELLER pursuant to Withholding Obligations which funds are
or may be required to be remitted to governmental agencies on or after the
Closing Date.

11.2 IRA. SELLER shall be responsible for reporting through and including
the Closing Date all federal and state income tax matters associated with IRA
deposits assumed by the BANK. The BANK shall report all such information
beginning on the date following the Closing Date. Said reports shall be made to
the holder of deposit accounts, as the case may be, and to the applicable
federal and state regulatory agencies. SELLER and the BANK shall each provide to
the other information in its possession reasonably requested by the other to
satisfy its obligations hereunder.

11.3 Interest Reporting. SELLER shall report through and including the
Closing Date, all interest credited to, interest paid by, interest withheld
from, and early withdrawal penalties charged to the Deposit Liabilities. The
BANK shall report all such information beginning on the day following the
Closing Date. Said reports shall be made to the holder of deposit accounts, as
the case may be, and to the applicable federal and state regulatory

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agencies. SELLER and the BANK shall each provide to the other information in
its possession reasonably requested by the other to satisfy its obligations
hereunder.

11.4 Pre-Closing Notices to Depositors. On such date as the parties may
agree, or in the absence of such an agreement on the date which is thirty (30)
days (or if such date shall not be a business day, the next succeeding business
day) prior to the Closing Date, SELLER and the BANK will notify all deposit
account owners at the Branch Offices (the "Depositors") whose accounts are to be
conveyed to and assumed by the BANK of the pending transfer of those accounts.
This notice will include a statement by SELLER urging Depositors to maintain
their deposits at the Branch Offices with the BANK. This notice will be in a
form acceptable to both parties and in compliance with all federal regulations.
The cost of such notice shall be borne equally by SELLER and the BANK. SELLER
will cooperate with the BANK in providing such other notices to customers of the
Branch Offices as the BANK may reasonably request. SELLER and the BANK hereby
acknowledge and agree that the notices and other communications to the
Depositors contemplated hereby will not include information concerning any plans
the BANK may have to, after the Closing Date, change rates or other terms and
conditions with regard to the Deposit Liabilities.

11.5 Post Closing Certification. Within five (5) business days after the
Closing Date, SELLER shall deliver to the BANK a statement setting forth the
aggregate amount of Deposit Liabilities as of the close of business on the
Closing Date, including accrued interest thereon, with a certification of the
chief financial officer, controller or other appropriate officer of SELLER,
certifying that, the information contained in the statement is true, correct,
and complete.

11.6 Post Closing Access to Records. After the Closing Date, SELLER shall
provide the BANK with access to, and will upon the BANK'S request provide the
BANK with copies of any Records which are not capable of being transferred to
the BANK pursuant to the Agreement. For a period of time prescribed in SELLER's
normal record retention policy, but not less than one (1) year from the Closing
Date, or such longer or shorter period of time as SELLER and BANK may mutually
agree, SELLER shall use its best efforts to preserve in paper, microfiche,
electronic, or other appropriate form all records which are not delivered to the
BANK and provide the BANK with reasonable assistance in assembling,
reconstructing, or interpreting such records.

11.7 Risk of Loss. The risk of loss or damage by fire or other casualty
or cause to the Assets until the Closing Date shall be upon SELLER. In the
event of such loss or damage prior to the Closing Date, SELLER shall promptly
restore, replace or repair the damaged Assets to the previous condition at its
sole cost and expense; provided, however, that SELLER shall have no obligation
under this Agreement to restore, replace or repair any of the Assets to the
extent such restoration, replacement or repair is not covered by insurance
proceeds or, in the good faith opinion of SELLER, is not reasonably practical.
In the event that such loss or damage shall not be restored, replaced or
repaired by the Closing Date, the BANK shall, at its option, either: (1) proceed
with the Closing and receive all insurance proceeds

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<PAGE> 29

to which SELLER would be entitled as a result of such loss or damage; or (2)
defer the Closing Date until such restorations, replacements or repairs are
made (provided that no such deferral shall affect the termination rights of the
parties specified in this Agreement); provided, however, if the BANK defers the
Closing Date and (a) if, on the date that would have been the Closing Date if
no loss or damage had occurred, SELLER has not commenced, or made arrangements
for restoration, replacement or repairs; or (b) if sixty (60) days after the
event of such loss or damage, such restoration, replacement or repair is not
completed, the BANK may, at its sole option, terminate this Agreement by
written notice to SELLER, whereupon no party to this Agreement shall have any
liability to the other to this Agreement, and this Agreement in its entirety,
except for the provisions of this Section 11.7 (which will survive such
termination), shall be deemed null, void and of no further force or effect.
The net book value of the Assets for purposes of Section 2.4 shall exclude any
monies spent by SELLER in restoring, repairing or replacing any of the Assets
pursuant to this Section 11.7.

ARTICLE TWELVE: INDEMNIFICATION

12.1 Indemnification of the BANK. SELLER shall indemnify, hold harmless
and defend the BANK from and against any and all damage, loss, liability, cost,
claim, or expense (including reasonable legal fees and expenses) incurred or
suffered by the BANK in connection with SELLER'S operation of the Branch Offices
on or prior to the Closing Date. SELLER shall indemnify and save the BANK and
its respective officers, directors, employees, and other agents and the BANK's
successors and assigns, harmless from and against any actions, assessments,
losses, costs, damages or expenses, including reasonably attorney's fees,
sustained or incurred by them resulting from or arising out of or by virtue of
any claim for breach of any covenant, representation or warranty made by SELLER
in this Agreement.

12.2 Indemnification of SELLER. The BANK shall indemnify, hold harmless
and defend SELLER from and against any and all damage, loss, liability, cost,
claim, or expense (including reasonable legal fees and expenses) incurred or
suffered by SELLER in connection with the BANK'S operation of the Branch Offices
after the Closing Date. The BANK shall indemnify and save SELLER and its
respective officers, directors, employees, and other agents harmless from and
against any actions, assessments, losses, costs, damages, or expenses, including
reasonable attorney's fees, sustained or incurred by them resulting from or
arising out of or by virtue of any claim for breach of any covenant,
representation or warranty made by the BANK in this Agreement.

12.3 Survival of Representations and Warranties. All representations and
warranties of SELLER and BANK contained in this Agreement shall survive the
Closing, but only for a period of six (6) years from the Closing Date. No
representations or warranties shall be extinguished by the Closing.

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12.4 Remedies. The remedies of each of the parties with respect to any
claim or cause of action relating to or arising out of this Agreement or this
transaction shall be cumulative and shall not be exclusive. The election of a
party to pursue one or more remedies consecutively or simultaneously shall not
preclude that party from pursuing other remedies at any time permitted under
this Agreement. Nonetheless, any recovery with respect to a claim or cause of
action obtained pursuant to one remedy shall accordingly reduce the amount
recoverable as to that claim or cause of action pursuant to any other remedy. It
is the intent of the parties that no double recovery may be obtained by any
party under any circumstances.

ARTICLE THIRTEEN: AMENDMENT, WAIVER AND NOTICE

13.1 Amendment. Any duly authorized officer of SELLER or the BANK may
make, execute and deliver such amendment or amendments, modifications, or
supplements to this Agreement as any one of such officers signing any such
amendment, modification or supplement on behalf of a party may approve, as shall
be conclusively evidenced by his or her signature to any such amendment,
modification or supplement in such manner as may be agreed upon by them in
writing at any time.

13.2 Waiver. The failure of either party at any time or times to require
performance at any time prior to the Closing Date of any provision hereof shall
in no manner affect such party's right at a later time to enforce the same. No
waiver at any time prior to the Closing Date by either party of any condition,
or of the breach of any term, covenant, representation or warranty contained in
this Agreement, whether by conduct or otherwise, in any one or more instances
shall be deemed to be or construed as a further or continuing waiver of any such
condition or breach or a waiver of any other condition or the breach of any
other term, covenant, representation or warranty of this Agreement.

13.3 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered or mailed, registered or certified mail, postage prepaid, as follows:

If to the BANK:

Independent Bank East Michigan
1111 West Caro Road
Caro, Michigan 48723
Attention: Ronald L. Long
President and Chief Executive Officer

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<PAGE> 31

with a copy to:

Varnum, Riddering, Schmidt & Howlett
Bridgewater Place
P.O. Box 352
Grand Rapids, Michigan 49501-0352
Attention: Michael G. Wooldridge, Esq.

If to SELLER:

First of America Bank-Michigan, National Association
108 East Michigan Avenue
Kalamazoo, Michigan 49007
Attention: William R. Cole
Chairman and Chief Executive Officer

with a copy to:

Howard & Howard Attorneys, P.C.
The Kalamazoo Building, Suite 400
107 West Michigan Avenue
Kalamazoo, Michigan 49007
Attention: Joseph B. Hemker, Esq.

ARTICLE FOURTEEN: GENERAL

14.1 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Michigan, and, to the
extent applicable, to the laws of the United States.

14.2 Entire Agreement. This Agreement the Schedules and the Exhibits
attached hereto set forth the entire agreement and understanding of the parties
with respect to the transactions contemplated hereby and supersede all prior
agreements, arrangements and understandings related to the subject matter
hereof.

14.3 Method of Consent or Waiver. Any consent hereunder or any waiver of
conditions or covenants as may be herein provided for, subject to all of the
other requirements contained in this Agreement, shall be evidenced in writing,
properly executed by a duly authorized officer of the party so electing
hereunder.

14.4 Public Announcement. SELLER and the BANK shall consult with one
another concerning the form and substance and timing of any press release of any
matters relating to this Agreement.

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14.5 No Assignment. Neither party shall assign or transfer any right or
interest in and to this Agreement, without the prior written consent of the
other party, except that SELLER may assign its rights hereunder to any successor
thereto by merger or otherwise.

14.6 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

14.7 Reliance on Headings, Etc. The Article, Section and Subsection
Headings contained in this Agreement are inserted for convenience only and shall
not affect in any way the meaning or interpretation of this Agreement.

14.8 Severability Clause. If any provisions of this Agreement shall be
held invalid, the remainder shall, nevertheless, be deemed valid and effective.

IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this
Agreement on the date first above written.

WITNESSES INDEPENDENT BANK EAST MICHIGAN

___________________ By: ______________________________________
Ronald L. Long
Its: President and Chief Executive Officer

FIRST OF AMERICA BANK-MICHIGAN,
NATIONAL ASSOCIATION

___________________ By: ______________________________________
William R. Cole
Its: Chairman and Chief Executive Officer

<PAGE> 1
EXHIBIT 23.1

Consent of Independent Certified Public Accountants

The Board of Directors
Independent Bank Corporation:

We consent to the use of our report included herein and incorporated herein by
reference and to the reference to our firm under the heading "Experts" in the
prospectus.

KPMG Peat Marwick LLP

Lansing, Michigan
October 17, 1996

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the use in this Current Report of Independent Bank Corporation on
Form S-2 of our report dated March 8, 1996, included herein, on the financial
statements of North Bank Corporation as of December 31, 1995 and 1994 and for
each of the three years in the period ended December 31, 1995.

/s/ Crowe, Chizek and Company LLP
Grand Rapids, Michigan
October 21, 1996